Forum
Posts by "macrosam"
189 Posts Total by "macrosam":
5
Posts by Anonymous "macrosam":
There are clear, evident reasons for EUR rise aside from short covering, which clearly occurred. EONIA has been floored by the gradual yet progressive removal of excess liquidity in the expiration of the 12 month repo and the presumably limited lifespan on the remaining 3 month and 1 week repos. This has set a floor on front end rates, supportive of the EUR. If you saw last week when China's growth of 10.3% was released, it was also accopmanied by the release of China's overall reserve holdings (as China does not provide the transparency to identify the % composition of these reserves). Foreign reserves grew by the smallest amount in years. Some of this has to do with lower exports (trade accounting is flawed, but for the sake of this argument let's go with this). Less exports results in less USD and EUR China is long. But another driver of the decline buried within the smaller net increase has clearly got to be due to the decline in the EUR. China's EUR reserves lost value, while USD increased. Couple this with possible greater US export revenues versus EUR revenues (again, don't have this transparency), any asset manager would engage is a rebalancing of reserves that required both the selling of USD to decrease exposure and the purchasing of EUR to increase the % of the reserve bucket. This had to occur regardless of trade concerns. And those trade concerns are more effectively addressed by focusing on increasin domestic demand and consumption, which China is explicitly focusing on as China is not foolish enough to ignore the fact that external consumption in the form of exports is a ship that has sailed. Why do you think China is going to relapse into stimulus, even at the risk of restarting the bubble-like real estate market via a revisitation of their Western expansion strategy (originated in 2000 and put on hold)? Have you not read the stories of labor unrest, mid-skill labor shortages resulting in increased wages?
July 14 (Bloomberg) -- Spanish banks borrowed a record
126.3 billion euros ($161 billion) from the European Central Bank in June as investors shun the debt-ridden nations lenders.
Spanish banks increased borrowing 48 percent from 85.6 billion euros in May, according to daily averages compiled by the Bank of Spain. That compares with a drop of 4 percent to
496.6 billion euros provided to lenders by the ECB in the whole euro area.
One thing of concern regarding the UK is Alan Budd's resignation, signaling some dissent in the Office of Budget Responsibility.