The euro is in full blastoff mode, as seen here via FinViz:
Dow futures are also up over 100 points.
What explains the spike?
At a ridiculously late hour of the night, the EU Summit appears to have resulted in modest advances towards bailouts without the need for harsh penalties.
This headline from Bloomberg, as tweeted out by Bloomberg’s Michael McDonough:
*EURO LEADERS RENOUNCE SENIORITY ON SPAIN LOANS -Bloomberg
Remember, after the European bailout a few weeks ago, the hitch was the the funds (to be provided by the ESM bailout fund) would be senior to existing sovereign debt, and this was seen as a problem for Spain keeping market access. Evidently Europe has agreed to not have this new money be senior to other sovereign debt, which is a minor pressure relief.
And here are some more headlines from DailyFXTeam about how bailout money may be used to recap banks directly.
Photo: Daily FX Team
So the bottom line: More flexibility, recaping of banks directly with aid funds, and removing the Spanish loan seniority issue.
This won’t be what saves Europe, but it’s not a total nothing.