The story of the day – from The Guardian:
Angela Merkel is poised to allow the eurozone’s €750bn (£605bn) bailout fund to buy up the bonds of crisis-hit governments in a desperate effort to drive down borrowing costs for Spain and Italy and prevent the single currency from imploding.
The Telegraph ran a similar story:
European leaders are poised to announce a 750 billion euro deal to bailout beleaguered Spain and Italy by buying the countries’ debts. Pan-European Government funds are set to be used to buy Spanish and Italian bonds, which have recently hit record highs – in a move which will send a strong signal to financial markets that the German administration is prepared to back its weaker economic neighbors.
The stories above are from reliable sources. Thus, we would expect them to be reasonably accurate relative to the next steps in Europe. Any bond-buying program should help risk markets in the short-to-intermediate term.
We continued to reduce our cash position today. We would have made larger incremental moves, but numerous 30- and 60-minute charts look tired. Tomorrow’s Fed announcement could spark big moves up or down, which is another reason to move at a measured pace in the short-term.