From our friend Vicki Schmelzer at MNI.
“The message is clear — the ECB buys bonds and upgrades these bonds in the moment of purchase from a junior to senior position,” said Hans Redeker, head of Global FX strategy at Morgan Stanley.
With the ECB seemingly out of the bond-buying business, the EFSF is meant to fill the breach. No sign of them yet in the secondary market.
When they do come in the first time, it will be a surprise and support the euro. But the impact will be muted the second and third time as the market begins to count down the remaining, limited buying-power of the EFSF.
EUR 700 bln doesn’t buy what it once did…
