Mr. Market is covering some shorts on headlines suggesting the ESM could be given a banking license ans allowed to recapitalize banks.
Keep in mind, if there is a EUR 500 bln lending cap, you can give it all sorts of magical powers, but it is still limited to EUR 500 bln…
In addition, the draft is just a draft. There are several contentious issues that Germany has until now rejected (banking license for ESM, ESM overlapping with ESFS) They could still be rejected in the end.
EUR/USD has popped as high as 1.3366 so far.
