I’ll lend to you and then you lend it back to me

For all the talk of the ECB lending money to the IMF in order to bulk up its resources is now gaining traction as BN reports that European national central banks will lend 100-200b euros to the IMF according to “two people familiar with the negotiations said.” So we’ll have European countries lending money to the IMF that will then lend money to European countries. One big circle and, 200b euros incrementally is not very much compared to what may be needed. Either way, it adds to the optimism that Europe is in the process of buying itself more time. Yields are down sharply in Italy and Spain but Portuguese yields remain stubbornly high and they will likely follow Greece at some point. The Shanghai index was a disappointment overnight as the below 50 PMI is offsetting any initial enthusiasm for the RR cut. It’s now up just 1.2% in response to it. Canada said jobs unexpectedly were lost in Nov by 18.6k vs an estimated gain of 20k. US payrolls are expected to rise 125k, 150k of which will be in the private sector.

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