Euribor Futures rise on ECB's refinancing operation

Euribor futures rose today after the results of the ECB's long-term refinancing operation. The European Central Bank lent commercial banks a record 442.24 billion euros (620 billion dollars) at 1.0 percent on Wednesday via its first offer of 12-month funds in a bid to boost credit flows.

Some analysts expected the ECB's spectacular move to trim rates charged by commercial banks for long-term borrowing, but others were less sure.
If that does happen, easier credit could underpin a rebound as the eurozone slogs through what is tipped to be a sluggish recovery from the worst global recession in more than 60 years.

On the back of this Euribors jumped along the front of the curve and less so further down the curve. Spreads continued to rise, with Sep10 Dec10 spread trading as high as 36.5.
The Schatz Bund spreads also rose massively as Bunds sold off as short term bonds were in demand.

Aside to this we also had rates kept on hold from the FED, with the FOMC stating that its Treasury purchase program size remains unchanged, much to the disappointment of some investors, this prompted a small sell of in stocks as they fell back way below their earlier highs after rising earlier on better then expected durable goods orders.
It is a telling sign that even after some very strong data markets failed to hold on to gains, which gives further evidence that we have more downside to go.