It has been quite an intense couple of days and the market has exploded through a combination of factors. The main one being that Super Mario for now has convinced the market he is the chosen one. I knew he would come through he just took another month or so to do it. In short he has put a backstop on Government debt. He will buy short-term maturity debt 1-3 years until his boots are completely filled. This will ease the funding pressures on peripheral EU countries that are experiencing massive pain through excessive interest payments on their funding. We have been here before though but the difference I think is that this is been done with Germany on board and I assume they will be the taskmasters ensuring that the PIGS with structural issues will stick to plan to resolve those issues. There will be no let up from the Germans on this front. So while this does not signal an end to austerity it is light at the end of the tunnel. The market is ablaze for two main reasons here, one is the unwind of short government debt which means money has to go somewhere- where better to go than equities which can yield a lot more, also a major worry or risk has not been removed but sterilised for a while so risk appetite can return. Game on.
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