Treasury Market Volatility: Not Uncommon At All, Why And How

All the signs were there, starting with the fact that the Fed and ECB together had supposedly the flooded the world with digital money yet a palpable “something” was really off. Ben Bernanke’s central bank had unleashed both ZIRP and QE, the latter of which had finished up a couple months before. In Europe, Jean Claude-Trichet’s outfit was “highly accommodative” in its own right if not quite as openly as their American counterparts.

Then, on Monday May 3, 2010, Trichet and the ECB’s Governing Council issued a notification that it was, well, decidedly ominous:

The Governing Council of the European Central Bank (ECB) has decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for the purposes of the Eurosystem’s credit operations in the case of marketable debt instruments issued or guaranteed by the Greek government.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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