Sunday, 26 February 2012
Euro crisis: less swap lines FED necessary because money market funds US are buying Europe again
The chart of Bianco shows that US money market funds after a big sell down again want to buy European bank deposits. That selling caused a weak Euro and the FED had to rescue the Euro with huge swap lines.
The addiction to higher yields bring the US money market funds back to Europe. They try again because they think that the three year deposits of the ECB will make the european banks to pay back those deposits before the ECB takes the liquidity back.
That renewed interest is one of the reasons (next to better macro news like a wonderful IFO) why the last weeks the Euro is strong again, even while Greece is a nightmare, the numbers of Spain have a bigger question mark than the Chinese numbers and Portugal is not fenced off well enough from Greece.