Sarkozy, Merkel “Convinced” Greece will Remain in Eurozone; Market Convinced of Default; Gold Declines US Dollar Drops; Band-Aids and Rubber-Bands
Equities continued their choppy overlapping rally today on news of more liquidity support from the ECB and statements from German Chancellor Angela Merkel and French president Nicholas Sarkozy that Greece will Remain in Currency Union.
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Bloomberg reports German Bunds Decline as ECB Provides Dollars to Banks; Greek Bonds Surge
German two-year notes slid for a fourth day as the European Central Bank said it will lend dollars to euro-region banks to ensure they have enough of the U.S. currency, damping demand for safer assets.
Ten-year bund yields climbed above 2 percent for the first time since Sept. 5 as stocks gained after French President Nicolas Sarkozy and German Chancellor Angela Merkel said yesterday they’re “convinced” Greece will remain in the currency union. Greek bonds surged as investors trimmed bets the nation will default. Spain’s 10-year yields approached a one- month high after the country sold 3.95 billion euros ($5.4 billion) of debt.
The ECB said it will conduct three U.S. dollar liquidity- providing operations in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank. European stocks and the euro rallied. It will offer the loans on Oct. 12, Nov. 9 and Dec. 7.
