The optimism from the successful sale of 10 yr notes at about 4:30am (B/C was 2.03 and money raise was upper end of expectations) in Spain was short lived as 2 hours after, EU officials said they agree with the Germans on their short selling ban and that they need to deal with the “problem of abusive short selling.” While they did say the ultimate decision rests with the individual governments, the endorsement was alarming to the markets. European markets immediately sold off and US futures followed which then accelerated with stops kicking in at the 1100 level one day before expiration. Also around 6:30, US$ 3 mo LIBOR was fixed at the highest level since July ’09. Greece will see another day of strikes today and France said they will freeze spending for 3 years. Germans will vote tomorrow on the Euro Zone bailout plan. Japan’s Q1 GDP rose 4.9% annualized but was below expectations of 5.5%.

Category: MacroNotes

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4 Responses to “EU officials unofficially endorse short selling ban, Grrrr”

  1. FrancoisT says:

    Perhaps a naive question: What’s the big deal with banning naked short selling? Banning short selling altogether is counterproductive, but naked short selling…why are the markets so worked up about that?

  2. Denis says:

    Same remark as Francois: what’s the big deal with banning *naked* short selling altogether in the EU? Especially considering that it’s illegal in the US as well. Fact is, the US should follow up, do as much, and take steps to actually enforce its existing laws.

  3. [...] of a Europe-wide short-selling ban; an unexpected jump in American initial jobless claims; exceptional volatility in currency markets; [...]