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Monday, April 15, 2024

Sovereign liquidity – Mike Whitney’s morning thoughts

Mike wrote to me this morning,

"Whoa! Have you seen this article?  Sovereign liquidity, what lies beneath

"Am I misreading this or has Trichet pulled out the bazooka? My question: High ranking US officials from the Treasury flew to Spain yesterday. Do you or Phil think the Fed is on a euro bond spending spree to prevent a crash (because the Germans won’t support EU–QE?)  Never a dull moment,  Mike" 

Excerpt: 

Here’s a perfect end to a week in which the ECB has apparently bashed peripheral bond markets into submission. Apparently.

Watch those bid-offer spreads.

We couldn’t quite believe this chart of the bid-offer spread on ten-year Spanish government bonds, made by Divyang Shah of IFR Markets, when we saw it. But it checks out, and is worrying (click to enlarge):

(Still not at the May 2010/Greek crisis nadir… yet.)

Source: Sovereign liquidity, what lies beneath, by Joseph Cotterill

http://ftalphaville.ft.com/blog/2010/12/03/426946/sovereign-liquidity-what-lies-beneath/

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