Futures Pop as World’s Major Central Banks Act to Lower Pricing on Liquidity Swap Arrangements

U.S. futures were up for the morning going into the 8 AM hour (mostly as the Chinese central bank has turned course and seems to be back to easing for the first time in 3 years) but just took another big leg up (and through that resistance of S&P 1206) on news all the world’s major central banks are injecting liquidity in the system by lowering pricing on liquidity swap arrangements (by 50 basis points). Whatever the details, the market takes any coordinated central bank action as ‘bullish’… shoot now, details later. Another example of how difficult it is to be short for any period of time as everyone is aiming for you. :)

US, Canada, England, Japan, Europe & Swiss central banks announce coordinated effort to lower US dollar swap pricing thru Feb.

More from Marketwatch:
Global central banks announced Wednesday that they are acting to strengthen the existing swap lines that allow them to provide dollars to domestic banks in an effort to ease financial market tension. Under the new arrangements, the Federal Reserve has lowered the cost of the swap lines. The arrangments have also been extended until 2013. The central banks also agreed to set up bilateral swap lines so that all currencies can be made available if needed.

__________
The new interest rate has been reduced to the dollar overnight index swap rate plus 50 basis points, or half a percentage point, from 100 basis points, the Fed said in a statement in Washington. The Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank are involved in the coordinated action, the Fed said.

“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the statement said.

ADP employment will be released shortly.

Update: ADP Employment Over Expectation at 206,000 – Going to be a Happy Day for Bulls.

While sometimes not anywhere near the Friday official data point, ADP for November just came in at 206,000 vs expectations of 130,000. Previous month revised up from 110,000 to 130,000 as well.

ADP today reported that employment in the U.S. nonfarm private business sector increased by 206,000 from October to November on a seasonally adjusted basis. The estimated advance in employment from September to October was revised up to 130,000 from the initially reported 110,000. The increase in November was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply.

Employment in the private, service-providing sector rose 178,000 in November, which is up from an increase of 130,000 in October. Employment in the private, goods-producing sector increased 28,000 in November, while manufacturing employment increased 7,000.

Employment in the private, service-providing sector rose 178,000 in November, which is up from an increase of 130,000 in October. Employment in the private, goods-producing sector increased 28,000 in November, while manufacturing employment increased 7,000.

Employment on large payrolls—those with 500 or more workers—increased 12,000, and employment on medium payrolls—those with 50 to 499 workers—rose 84,000 in November. Employment on small payrolls—those with up to 49 workers—rose 110,000 that same period, up from the 67,000 jobs created among small businesses last month.

Full report here.

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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