Thursday, December 8 Market Recap

THURSDAY (DJIA -199) The ECB lowered its refinancing interest rate by .25% to 1.75%, as expected. It also is allowing banks to borrow money from it for 36 months. The reserve requirement for banks was cut to 1% from 2%, and the types of collateral accepted were expanded. All of these are positive, liquidity creating moves. Initial jobless claims fell to a much better than expected 381K last week. But, the ECB disappointed markets by indicating that it had not committed to wholesale buying of Euro bonds in order to backstop those markets. The market was expecting otherwise.