It looks as though the market may have taken a headline on US support for Freddie and Fannie the wrong way. Reuters reports that the Treasury has no plans to use its authority to backstop the GSEs. That is not to say that they won’t backdrop the Agencies, merely that they do not see the need to backstop them at present.
Stocks are diving, with the Dow down 122 pints. EUR/USD has firmed to 1.4740. A break above the 1.4770/90 level would likely prompt greater short-covering.
