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IBDvalueinvestin (99.58)

EURO will now trend higher once again because of European Central Bank buying government and private Debt.

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May 10, 2010 – Comments (4)

This reminds me of when The Federal Reserve bought bonds in the USA to lower real rates on Mortgages and it worked even better than expected. I believe the European move will drop rates on bonds quickly now and in turn will make the EURO rally back into the 1.30's - $1.40's

Stocks which have dropped sharply because of the EURO decline, will now rally back up with the Euro rebound.

"The European Central bank will buy government and private debt to keep debt markets working and lower borrowing costs, a crisis measure dubbed the "nuclear option," while the U.S. Federal Reserve joined with other central banks in the effort, reactivating a currency swap program used during the earlier stages of the financial crisis to ship dollars overseas to be pumped into banking systems as short-term credit."

The overnight decision immediately jumpstarted markets worldwide. The euro immediately shot back to life and up to $1.30, recovering from Friday's 14-month low of $1.2523.

4 Comments – Post Your Own

#1) On May 10, 2010 at 12:59 PM, PeteysTired (< 20) wrote:

I wish I had my own Central Bank so I could spend whatever I wanted.

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#2) On May 10, 2010 at 12:59 PM, PeteysTired (< 20) wrote:

I wish I had my own Central Bank so I could spend whatever I wanted.

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#3) On May 10, 2010 at 1:12 PM, IBDvalueinvestin (99.58) wrote:

Europe had the money to spend as a whole, I just never thought they could act as one Unit.

Europe just got one step closer to real unity.

The word European Union now has a whole lot more meaning.

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#4) On May 10, 2010 at 1:49 PM, IBDvalueinvestin (99.58) wrote:

The euro got a major boost after European Union officials met this weekend to discuss debt problems in Greece and volatility in the shared currency.

On Sunday, the EU approved a rescue package, valued at about $1 trillion, that has three main components.

The biggest provision will use nearly $570 billion to create government-backed loans meant to shore up confidence in shaky credit markets. That plan will put the weight of larger, stronger economies such as Germany and France behind weaker members of the European Union, such as Greece, Portugal and Spain.

About $77 billion will go toward a euro stabilization fund. The International Monetary Fund said it would contribute $284 billion.

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