About that broken ECB transmission mechanism…
Readers might recall that FT Alphaville spent a good portion of 2011 speculating about whether the ECB had lost control of the policy transmission mechanism. Our point specifically related to the ECB’s...
View ArticleSpain in the spotlight
The ECB’s move to unclog the transmission mechanism, that carries its monetary policy decisions to markets and the wider economy, has been unconventional. The €1,019bn in cheap three-year loans to...
View ArticleThe disappearing Spanish GC repo market
Thanks to Mario Draghi’s double installment of 3-year LTROs this year and last, it’s been a while since we’ve had to worry about dysfunctions in the European repo market. Indeed, it wasn’t that long...
View ArticleSpanish bonds / banks / bonds / banks
Beyond Thursday’s back-up in Spanish bond yields — questions about Spain’s banks. How could there not be when they’ve been buying so much sovereign debt since the LTRO. Ever since December’s record...
View ArticleBringing the debt home, Italian and Spanish banks edition
Hold the phone… something very interesting in the Spanish banks <=ECB=> Spanish sovereign nexus came up at the end of last week. Suggesting that it’s in better shape than the Italian version of...
View ArticleECB meeting preview, door likely to be left ajar
The European Central Bank will meet on Thursday, and the broad consensus is for rates to remain on hold. After yesterday’s dismal Purchasing Manager Indices, the press conference will be watched even...
View ArticleNot such dramatic outflows from Italy, after all?
Italy’s March balance of payments data showed a big net outflow for investment This was something picked up by Deutsche Bank’s Alan Ruskin (and us, here) as suggesting an accelerating outflow of...
View ArticleSpanish banks increasingly dependent on ECB drip
It doesn’t come as much of a surprise that the Spanish financial sector is having to increasingly rely on ECB funding. However, data released by the Bank of Spain on Tuesday reveals the sheer speed at...
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Paying back the LTRO early… or not
Consider this chart from Bank of America Merrill Lynch: What it shows is pressure building on the front-end of Euribor contracts. Short positions might be stacking up, apparently. Why? It might be...
View ArticleExpect to hear a lot more about asset encumbrance, say SocGen
Asset encumbrance ratios are becoming a fashionable metric when it comes to assessing the health of banks. On that note, Société Générale’s cross-asset research group provides a nice little break-down...
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European bank debt is attractive again (but not *that* attractive)
Things have gotten so good recently for European banks that the idea of them repaying their LTRO cash early is getting more attention as the first date at which they can do so — January 2013 — creeps...
View ArticleThe ABS hangover, Eurosystem-style
The ECB announced some updates to its General Documentation on Wednesday. The item on ABS modifications caught our eye. The move in question was first announced last April, and it represented a...
View ArticleThe great European bank heist reversal
LTRO repayment chat is speeding up the closer we get to the fateful day at the end of January when Euro-banks might actually start sending back once cheap cash to the central bank. How much will be...
View ArticleEurozone liquidity and menacing straws
Take one big pool of eurozone liquidity, insert straws and start sucking. We've already opined on the chances that early-LTRO repayment will lead to a drain on excess-liquidty in the euro-area. But we...
View ArticleLTRO repayment bifurcation risk
The first LTRO repayment opportunity is fast approaching. David has already considered how it may or may not impact European lending rates, including the chances of Eonia rising significantly if the...
View ArticleLTRO flow
From the ECB on Friday: As announced by the Governing Council on 8 December 2011, counterparties have the option to repay, after one year, any part of the amounts that they were allotted in the...
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LTRO flowed
That’s a very small €3.7bn take up by banks participating in the European Central Bank’s three-month Long Term Refinancing Operation on Wednesday. We’d expected more.Continue reading: LTRO flowed
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Ware the currency wars
You gotta roll with fashion: Continue reading: Ware the currency wars
View ArticleBelgium and the LTRO
LTRO-porn continues… this time it’s semi-core. As we noted before, the higher than expected repayments by banks of the Long Term Refinancing Operations to the ECB might also push up the amount of paper...
View ArticleDraghi’s pro-LSAPs?
Mario Draghi talked, everyone was a little confused, a little wary… so the euro fell. He OMT’ed the FX market. Clever. But what if talking isn’t enough? As Capital Economics argue, the power of talk is...
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