‘Get Out of Jail Free’ card has been honored

Dubai pulled its ‘Get Out of Jail Free’ card that specifically says on it “This Card May Be Kept Until Needed Or Sold.” Abu Dhabi and the central bank of the UAE honored it and satisfied the repayment of $4.1b of bonds due today with a $10b injection. It’s nice to have a rich uncle. The news came out at almost 11:30 last night and all markets immediately rallied. Dubai’s stock market was up 10%. Greek bonds are not rising in sympathy as their 10 yr yield is up 11 bps ahead of the PM’s speech today which will tell us how Greece plans to cut its deficit. In the eyes of the market, a better than expected Q4 Japanese Tankan report was offset by a drop in cap ex spending plans and the Nikkei was the only major market not to rally as a result. The FOMC two day meeting begins tomorrow. The Fed may think it will be up to them when they raise rates but when the time comes, it will have been the bond market that dictated when.

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