Reuters: Central banks preparing for coordinated action to provide liquidity after Greek election if needed

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According to G20 sources.

EUR/USD rallying on the news. The liquidity would be dispersed across the markets and currencies, so not really sure why this is euro bullish, as Europe would derive the lion’s share of support, one would assume.

Looks like it is a question of cover shorts first, ask questions later.

Stocks and commodity currencies like liquidity talk, no matter the currency, as does gold…

It’s almost as if Mr. Market doesn’t understand that in order to get the liquidity, the shite has to hit the fan first…He’s skipping that first bit… My take on the headline is we’re talking about extending bigger swap lines from one central bank to another in the near-term, not necessarily coordinated QE, or anything of the like, though I’m just reacting to a headline and to past central bank actions in times of stress.

The aim would be to maintain liquidity in the money markets, not to easy monetary policy. Again, in my view.

UPDATE–From the Reuters story:

Their first line of defense probably would be a statement that policymakers are ready to take whatever steps are needed to assure market stability.
This usually is a signal for technical steps to keep cash flowing through the financial system. Currency swap lines already are in place which can be drawn upon to ensure there are enough dollars available if global investors rush into the safety of U.S. assets. Central banks also can hold extra auctions to flood banks with short-term cash via repurchase agreements.

13 Comments

  1. I was wondering why S&P 500 futures just spiked on sudden high volume. Lemmings.

  2. a truly idiotic market reaction. I think/hope my strategy loading up on silver the last 3 days will be rewarded. I was shaken out of my EURUSD short entered @1.26 (I was too greedy not taking profit during the european morning session) :(.

  3. Yawn….Their jawboning is wearing thin. G20, ECB, Euro politicians and others – Show me where the money is going to come from? You going to just pull it out your culos?

  4. BS Fan going at full speed, now we just have to wait for the said shite to hit… 5…4…3…;)

  5. Where will the money (or collaterals if we are talking about credits) from? A round table of debtors sit together and talk about credits – what the heck.

  6. You have it about right, Jamie, in my opinion. EUR/whatever is a bit nervous now, but apparently hamstrung by indecision. The big weekend is upon us. Monday could get to be more interesting. Hope so, anyway. I could use a little excitement …

  7. It seems to me that this has to be the hey-day of the rumour-mill, fuelled by desperate people in all corners, fanned by the internet, while the reality is that the system (fiat money etc) is a busted flush. People desperately hoping someone else will dig them out of the hole they dug themselves into.
    Moreover, many more people agitated at those who have laded them in the shite, many of whom were never (democratically) voted into the positions in which they now can create even more chaos.
    Glum times:(
    However, we must reap what we can as its a time of devil-take-the-hindmost. Get to it, traders!
    I’m going to get some supper and watch the football. At least the 22 on the pitch will be playing an honest game with no fake falls…. :wink:

  8. am shorting into that rally

  9. I thought they had an unlimited line into the Fed? How do they extend that, unlimited+1?
    The banks have also still got most of the LTRO money parked at the ECB (for a rainy day no doubt). I would have thought liquidity isn’t the problem.
    Maybe they want a line into the SNB ;-)

  10. Guys, my advice is: don’t jump too quick into shorts here because you might be jumping upfront of a train. The market is already heavy short risk and no longer reacts to negative news – look at yestedays and todays downgrade reaction – it was just no reaction => this is a warning from Mr Market which you shouldn’t ignore.

  11. The market is ‘pricing out’ the disaster scenario, so shorts have to cover and indecisive bulls get in.

  12. This rumor / headline nonsense is just fuel for the High Frequency Traders to amplify the volatility. The SEC should ban HFT as it makes the retail investor stay out of the market. But the sychophants at the SEC are owned by the big banks and the big banks llove their HFT cousins.

  13. Markets were MUCH more volatile before HFT. It is not even close to what it was 15-20 years ago. Was even worse 30-40 years ago …

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