Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Equity markets are looking for any sign of coming intervention and this morning some comments by ECB head Mario Draghi reversed U.S. futures from decent losses to modest gains, a turnaround of roughly 13 S&P points in fact. The U.S. dollar went from gains to a half percent loss in very short order – and the inverse relationship continues. It remains to be seen if markets can hold onto these gains for the day.
There was not that much new here but this language seems to be what the markets are most exited about:
“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” he told an investment conference in London. “To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate.”
Therefore it looks like we will get action from the Fed either next week or 6 weeks hence, and the ECB is either planning something or jawboning big time. Markets don’t really care about the long term impacts (as nothing the ECB has done in the past has solved a thing) but will of course act sharply in knee jerk reaction when “whatever” is announced.
EDIT 7:05 AM – Draghi has now created a 20 S&P point reversal.
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