Getting there, but slowly
After an all-nighter in Brussels, European leaders have finally announced a package of measures which they hope will placate the concerns of investors and traders regarding the sovereign debt and banking crisis. The package has three major components ? the firepower of the EFSF has allegedly been raised to EUR 1.4trln, Greek debt-holders have apparently accepted a 50% haircut, and European banks are to be recapitalised. Also announced was a more significant role for the IMF (although exactly what that role will be is not yet clear), and the continued involvement of the ECB with respect to buying the bonds of troubled European sovereigns in the secondary market. These measures have literally just been announced in the last couple of hours and as a result, fuller analysis will follow over the course of the day. Suffice to say at this stage, European policy-makers appear to have done enough for now to encourage the belief that they are finally facing up to the true extent of their difficulties. In response, the EUR is up above 1.40, the dollar is weaker, metal prices are higher and Asian equities are up by more than 2%.
