Federal Reserve Bleeds The Dollar To Keep Europe on Life Support For Another Week

Source: Business Insider
Joe Weisenthal

MARKETS SURGE AS FED/ECB/BOJ/BOE/SNB/BOC ANNOUNCE COORDINATED INTERVENTION

All the world's central banks have just announced a big coordinated intervention to lower swap rates.

What does that mean?

Basically this: European banks have been parched for liquidity, and need access to dollars. The ECB can't supply them dollars unless it borrows them from the Fed.

Essentially today's action makes it easier for the ECB and thus European banks to borrow dollars.

It's not a solution to the euro crisis by any means; it just means that the most acute liquidity problems will be mitigated for now.

The market is loving the news.

US futures had been down by 0.5% at one point this morning, and now the Dow is up 400 points.

Note that there are some other bullish things going on today. China lowered its Reserve Requirement Ratio also this morning, and we got a strong ADP jobs report.

So, lots of bullish action going on.

Here's the full announcement from the ECB.

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