Bill Wexler's Trading Cabana Message Board

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Non-Tech : Bill Wexler's Trading Cabana

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To: The Reaper who wrote (2593)	8/14/2007 4:54:47 PM
From: RockyBalboa	Read Replies (1) of 6370

kk, the following happened today, liquidity actually dried up today again but this time the reason was homemade: first the BOE announced to open an unlimited funding facility but at a penalty rate of 6.75% (+100bp). Relying on this, the ECB cut back nearly all of its funding, see: Message 23791038 But the problem was, banks didn't like the penalty interest UK facility and the ECB took out most of its liquidity except 7.5B (so they drained 60B). Banks didn't react early and the ECB didn't do a quick tender... During the day it looked good but then liquidity dried up. The geman dax traded well most of the time but fell back in concert with US markets. Well, the doctor put the patient without oxygen. It tried some time but went eventually moribund.

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