The Europeans need simply to open a trading account sell some Bunds and treasuries - then have some IMF and ECB officials come out and say they are looking at having the ECB make more purchases of sovereign debt - then whatch as the notes and bonds sell off rather dramatically - at which point they could cover the shorts. Then they could drag out some cranky German finance person or some deputy there of and proclaim that this would possibly be illegal and then whatch treasuries and Bunds move back up. In one way shape or form this has been basically what has been going on day after day - in the long end. They could certainly raise some serious capital by doing exactly this - could they not? The short end not so much as the fears their continue to push futures prices lower in the front end of the eurodollar curve.
To take a look at trading flows and see more stories and flows on the above simple scenario members can log in here. http://financialfutures.typepad.com/accutic_plus/
From today's A-tic plus report: This morning this sort of renewed focus on the potential for more intervention by the ECB helped rally Sovereigns with the Italian spread over German rates narrowing by 14 basis points rather quickly – hourly chart below shows US 10yr. futures pulling back on this action.
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