The ECB joins the ‘Save Greece’ campaign

The ECB decided to chip in to the ‘Save Greece’ campaign by extending to year end 2011 their altered eligibility requirements for accepting collateral to repo. Instead of expiring at year end, the ECB will continue to accept BBB- or higher rated collateral instead of having it revert to its previous cutoff of A-. With Greece hanging by its A- rating by a thread, it relieves pressure on those banks that hold Greek sovereign debt. The move is helping European stocks, led by the banks, Greek debt is also rallying and the euro is up. Another over levered situation is getting a reprieve today as Dubai’s government said they will give Dubai World $9.5b to help them restructure. Dubai stocks are up 4%+ in response. UK Gilts are down after a mixed review of the new UK budget release but the pound is rallying after a better than expected retail sales report. With yesterday’s possible tipping point in global bond markets, the US sells 7 yr notes today.

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