We ran this post yesterday, but the rumours just aren’t stopping. Updates at the bottom.
Markets have been back and forth since yesterday over four separate of rumours out of Europe, with denials and confirmations flying around left and right.
Here’s a synopsis of all those wild stories flying around the rumour mill:
1) Italy-China Bond Purchases
It all started yesterday afternoon, with a Bloomberg blast reporting that China might buy Italian bonds. Markets soared. The blast cited an FT article which no one could find online. The FT also denied that it had published such an article. Markets tanked.
We got to the bottom of this, establishing that the Bloomberg reporter responsible for the report had seen a preview of an FT article on the topic. That article was published later in the day.
Then today, Reuters cited Italian officials who said the talks centered around Chinese industrial assets, not bond purchases. The markets seemed unfazed by this news.
2) BNP Paribas And Dollar Liquidity
This morning, an opinion piece published in the WSJ cited an anonymous source at the bank who said, “We can no longer borrow dollars.” The bank quickly denied that, then announced later that it would investigate the article.
3) Merkozy Announcement
4) Dutch Finance Minister And Greek Default
As if three rumours were not enough already, reports circulated that the Dutch Finance Minister stated his intent to give up on Greece and saw Greek default as unavoidable. The Dutch government lambasted that report. This whole thing happened too quickly for us to tell if the markets moved on this news.
Merkel warned everyone this morning to watch their words when talking about the crisis, but clearly this isn’t happening. These reports have (at least allegedly) come from reputable news sources, and it remains to be seen whether they hold merit.
UPDATE: Now we’ve got a fifth one!
5) Geithner And Expanding The Size Of The EFSF
Reuters reported earlier today that U.S. Treasury Secretary Timothy Geithner would urge European Finance Ministers to expand the size of the European Financial Stability Fund when he meets with them tomorrow in Wroclaw, Poland. Now a Bloomberg update says that CNBC says that Reuters says that Geithner won’t advocate a bigger fund at the meeting.
UPDATE: The rumour mill convulses again! Here’s what we’ve got for you (so far) today:
A rumour that Austria had ruled out the EFSF for Greece — likely an exaggerated version of the fact that they just delayed a vote on the EFSF — sent markets tumbling this morning. They recovered once the news was set straight.
Now a new rumour that China is willing to buy the debt of sovereign nations is cheering markets. But as we’ve already said, there’s a ton of controversy about this.
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