Stocks Rebound As ECB Panics

File this under “somebody do something…”

Having just noted European spreads starting to blow out on fears of a Le Pen victory in France (and ongoing inflationary yield rises across sovereigns), it appears The ECB just hit the panic button.

🔴 ALERTE INFO
Emmanuel Macron et Marine Le Pen désormais au coude-à-coude aux deux tours

🔸 51% pour Macron
🔹 49% pour Le Pen https://t.co/DygX0fJ9sT pic.twitter.com/FeDm95SCEO

— BFMTV (@BFMTV) April 8, 2022

Bloomberg reports that The European Central Bank is working on a crisis tool to deploy in the event of a blowout in the bond yields of weaker euro-zone economies, according to officials familiar with the plans.

“It’s not clear what the tool would look like, though such an instrument would presumably involve bond purchases in some form to contain yields.” – BBG

Lagarde doesn’t have the guts to preemptively “whatever it takes” it so she is leaking via Bloomberg https://t.co/roV4RMJ6Y1

— zerohedge (@zerohedge) April 8, 2022

So one month after ECB stopped its emergency bond-buying, it is readying something even bigger?

The next ECB meeting is less than a week away but Bloomberg reports that policy makers haven’t decided whether to ultimately publicize a stand-by tool or keep it under wraps unless it’s needed.

The implied ‘redenomination’ risk is rising once again in EU Sovereign CDS markets…

The reaction was only modest for now in European spreads with Italian 10Y over Bunds coming in only 4bps..

But always willing to rip on any easing related news, US equities are surging…

Which – as Bill Dudley has explained – means The Fed will just have an even bigger bubble to crash in order to get inflation under control.

Powell as ECB sends stonks soaring pic.twitter.com/KZt3BSg1GU

— zerohedge (@zerohedge) April 8, 2022