The euro is down sharply today on the heels of renewed stress in Euro bond markets.
Read email I received from Warren Mosler, below:
| Greece - from bad to worse. As the markets worry about Greece pushing back on the austerity measures that need to be taken to achieve IMF funding (politicians balking at being pushed out of their jobs by the public reaction), the markets are showing their anger. The 10-year spread to Bunds is just about to break 400bp (55bp wider today) and the 2-year yield is out ~150bp on the day. It's worth noting that in these conditions there's very little true trading going on - there are no bids, mkt is one sided. Even the domestic mkt makers are no longer showing bids. |
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4 comments:
HELLO MIKE
JUST WANTED TO RE-ITERATE HOW YOUR THEORY OF CAPACITY HAS TOTALLY ENABLED ME TO SEE ALL THIS COMING IN VERY CLEAR AND EASY TO UNDERSTAND TERMS.
BIZ RADIO IS HISTORY, BASICALLY EVERYONE HAS LEFT AND BEEN REPLACED BY BLOOMBERG FINANCIAL RADIO - A MERE SHELL OF THE SHELL IT WAS.
I HEARD ON THE NPR NEWS SOURCE THE OTHER DAY REGARDING HOW AUSTERITY WILL HURT EUROPE'S GROWTH BUT NOBODY GOES TO THE NEXT POINT.
VAMOS PITBULL !
Mike,
I noticed that for both the Canadian $ and I looked at the Australian $ they both bottomed last March timeframe along with oil.
The USD also seems to have a sig. top vs Euro around that same time as the oil bottom.
Resp,
Right Matt. It seems like the Euro/USD pair will be in a tug-o-war between the negative forces of Euro collapse fears vs continued USA GDP growth optimism. Who will win? Dr Wray has said that a financial crisis part two may be hitting at anytime in the USA. His argument is that the big banks are holding about 500b in secondary mortgage assets and they are overvaluing them. Using correct valuation, he says, the big 4 banks would be insolvent. If there are fireworks when this comes to light, I think the Euro will buckle dramatically.
Thanks, Goog!
Matt: And the question is, will oil continue its ascent? If the economy expands further, that's likely, however, I may be in the camp of BubbleRefuge and Randy Wray, but the fiscal has turned a bit cloudy at the moment. Hard to read the tea leaves.
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