From Zero Hedge:
... JPMorgan's Pawan Wadhwa... announced that the ECB may resume SMP purchases if the [Spanish] 10-year hits 6.5% , much to the chagrin of Germany, which was fooled into believing LTRO 1+2 would mean no more SMP purchases.
More importantly, since the 6.5% barrier will be taken down with impunity, in days if not hours, and the SMP has proven time and again to be powerless to prevent mass selling, the next big bogey is 7.5%... at which the ECB will likely announce another three-year discount window bazooka, pardon, LTRO.
What JPM does not say is that with the half life of each successive LTRO getting cut in half, LTRO 4 will be needed in June, LTRO 5 in July, LTRO 6 in July, LTRO 7 in July, and so on.
Most importantly, now that the banks, who are desperate for some cash infusion from either the Fed or the ECB, know what the critical threshold bogey for action is, they will be sure to facilitate the ECB's life, and send Spanish 10-years plunging to at least 7.5% and demand Draghi to play ball, again.
In other words: now that the market knows what the consensus is to get more European QE, it will promptly do it...
Read full article...
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