Record Interest in ECB's Unlimited 1-Yr Funds Offer Suggests Investors Believe Rates Will Rise Soon
The FT is running a piece this morning discussing the European Central Bank's record "stimulus by stealth", which is slated for today. This stimulus package includes the first-ever offer of unlimited 1-year funds, a move which is being viewed as yet another emergency liquidity-boosting operation.
With the value of the auction expected to exceed the ECB's previous single operation record of $483 billion, some market players are viewing the extreme investor interest as a signal that rates will not return to current levels for some time. One Goldman economist cited in the article said "This could be a big final easing..." and that "If I were a bank I would be gathering up all the furniture to use as collateral to take part."
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