• ECB leaves rates unchanged, introduces no measures to improve liquidity, market function. Did not discuss buying bonds, Trichet says.
  • S&P affirms Italian debt rating, quelling rumors of downgrade
  • Merkel: Market is exaggerating tensions, speculators are our adversaries
  • Greece passes austerity law; rioting resumes
  • Merkel: IMF had to act on Greece because Europe could not act alone
  • German cuts tax revenue estimates, Italy cuts growth outlook
  • Fed’s Bernanke: US economy continues to strengthen
  • US jobless claims fall to 444,000 from 448,000
  • Trading error in S&P 500 rumored to have sparked nearly 8% US equity slide intraday

I’ve seen quite a few market panics in my nearly 25 years in the market but today was definitely one of the top ten and maybe one of the top five… Oct 1987. Black Tuesday 1992, and the days after the Lehman collapse might rival today, but few top it…

Markets were already under extremely intense pressure at mid-afternoon in New York with more rioting in Athens flashing across traders screen when US equities went into an epic freefall, never before seen in terms of the speed of the move, in my experience. The Down fell almost 1000 points intraday, the S&P 500 fell more than 100 points and all the other markets came completely unglued. Credit began to freeze like it did in 2007 through early 2009 and the market -making function almost seized.

It would not surprise me at all to hear of central banks intervening in markets tomorrow, not to change the market’s direction so much as to try and lower volatility.

EUR/USD fell as low 1.2510, coming perilously close to triggering what is rumored to be a massive 1.25/1.35 DNT…

USD/JPY had a day for the ages as leveraged accounts shed carry trades against things like the BRL in addition to the majors. Structural JPY-cross longs were were taken out and shot. 87.85 was the low for USD/JPY, 110.49 was the EUR/JPY low. AUD/JPY was slaughtered as well, falling 8 JPY peak to trough today. Makes this morning’s EUR/CHF price action look like a walk in the park…

The SNB abandoned it defense of the 1.4325 level, prompting a slide as low as 1.4005…

Expect markets to be razor thin on Friday with banks conserving capital and speculators spooked by a spike volatility. Non-farm payrolls are small potatoes compared to what we’ve seen today and will be an asterisk, in the schedule.