Okay, I admit, the headline is a roundabout way to get the Margo Channing quote into the first line:
"Fasten your seatbelts, it's going to be a bumpy night!".
But between central bank interventions and this, forex could get perilous fast.
I am seriously thinking of retiring to the sidelines.
From FT Alphaville:
Euro liquidity and the implications for cash-collateral
According to Bloomberg data, there’s been an interesting development in the euro swaps curve over the last week.
As can be seen below, the very front end of the curve has inverted ever so slightly:
A persistent inversion of this sort — we are told — usually reflects changing rate expectations, towards a more hawkish stance from the ECB.
Hence, this is partly the result of last week’s Long-Term Refinancing Operation (LTRO) rollover, which saw borrowing at the European Central Bank decline sharply and with that short-term rates, such as Eonia (Effective Overnight Index Average), spike higher.
According to Barclays Capital, for example, the liquidity surplus in the eurozone banks now stands at about €31bn, from €108bn the day before the rollover....MORESee also Alphaville's "Euro watching"