Now that German courts have given the greenlight the ESM, we shall take a look at how the market has reacted.
Prices have rallied predictably on the back of ESM ratification. However a few questions remain
– Will Italy and Spain apply for bailout funds under ESM?
– Will the amount in ESM be enough to save Euro-zone?
– Will there be another need for parliamentary approval since German Courts has ruled that German liability to the ESM must not exceed â‚¬190bn without asking the Bundestag for approval.
– Will German courts consider the Outright Monetary Transaction (OMT) a violation of German sovereignty?
Using the last big EU/ECB news as reference (OMT announcement), we could potentially be see inactivity while the European traders digest the news and weigh all the unanswered questions. Perhaps we may only see a strong rally/sell off during US market opening.