An earlier article had been making rounds on ECB President Mario Draghi’s comments regarding a potential Greek Euro-zone exit. Effectively, Draghi said that he wants Greece to remain in the Euro-zone but that it ultimately was not the ECB’s job to decide that. Another article noted Draghi as saying the ECB will not compromise on its principles to keep Greece in the EZ. In other words, there’s a line in the sand.
Treasuries, stocks, and everything really, saw it’s biggest volume spike of the day when a related wire hit moments ago:
RTRS- ECB STOPS MONETARY POLICY OPERATIONS TO SOME GREEK BANKS AS RECAPITALISATION NOT IN PLACE -CENBANK SOURCES
Bottom line, the ECB is wasting no time in showing Greece the line in the sand. MBS and Treasuries both hit their best levels of the day following the wire, but have since moderated a bit–now back to just ‘strong’ levels. We don’t know where markets are going with this one yet, but wanted to let you know the cause of the recent spike. It could turn out to be more ‘shock value’ than anything, but we’ll keep you posted.