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Bund Futures At Another Record High As European Short-Term Funding Situation Deteriorates

Tyler Durden's picture





 

Even as the German Bundesrat passed the euro bailout law, things in
Europe are taking a material turn for the worse, with the Bund at new
record highs, and Libor-OID creeping ever higher.

06:48 05/21 STG 3-MO LIBOR/OIS SPREAD WIDENS TO 21.1 VS 20.8BPS THU
06:48 05/21 EURO 3-MO LIBOR/OIS HOLDS STEADY AT 24.2BPS FRIDAY
06:47 05/21 DOLLAR 3M LIBOR/OIS SPREAD WIDENS TO 26.7BP VS 25.4BP THU
 
GERMAN 10-YEAR GOVERNMENT BOND YIELD HITS RECORD LOW AT 2.656 PCT

We will post the Libor dispersion by bank shortly. We have a
feeling the European banks in EUR Libor will be screaming higher as
Lehman II mentality takes hold.

And some more on German legislature to bail out the world from Reuters:

The Bundestag (lower house) approved Berlin's contribution of up to 148 billion euros ($183.8 billion) in loan guarantees, deeply unpopular with voters, on top of an equally divisive 22.4 billion euro contribution to a package for debt-ridden Greece.

The bill passed by 319 votes to 73 with 195 abstentions after the opposition Social Democrats opted to abstain. The upper house (Bundesrat) was due to approve it later on Friday.

The vote brought no relief for European shares, which extended losses to 2 percent on the day after Asian stock markets slid again. Japan's Nikkei average closed 2.5 percent down for a loss of 6.5 percent on the week, mostly driven by worries about the euro zone.

Chancellor Angela Merkel's center-right government failed to rally broad cross-party backing to ease public opposition to bailing out weaker euro zone states despite stunning markets this week by unilaterally banning speculative trades in some financial instruments.

 

 


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Fri, 05/21/2010 - 08:30 | Link to Comment lewy14
lewy14's picture

Why is the USD LIBOR-OIS widening and not the Euro?

In any case this is the contagion vector into the real economy.

Fri, 05/21/2010 - 08:37 | Link to Comment jbc77
jbc77's picture

Futures dropping like a rock. I have a feeling the overall funding situation is a lot worse than any cares to let on. Perhaps even worse than savy zerohedge readers are aware of.

Fri, 05/21/2010 - 08:44 | Link to Comment Mako
Mako's picture

I told Harry to hold onto his 10,000 party hat.  They never listen.

Fri, 05/21/2010 - 09:21 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

This morning, TurboTaxTim was wearing his Buy UST rally cap and had a big smile on his face.

Fri, 05/21/2010 - 08:44 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

Merkel has a bund in the oven?

Fri, 05/21/2010 - 08:47 | Link to Comment plocequ1
plocequ1's picture

What about a bailout? Is this achievable, We are already Trillions in debt. I hope the party isnt ruined be a bailout announcement. Please Tyler, Tell me a bailout will not work..

Fri, 05/21/2010 - 09:01 | Link to Comment Mako
Mako's picture

The US credit system is $52T of debt, without this debt you would have no credit system.

No credit system = no pulling supply and demand from the future = you get what you need and not what you want.

Humans have been bailing out the system and themselves for 66 years.  It's when humans are unable to bailout further when the issues appear.  The only way for humans to continue to bail themselves out is to continue to pull demand from the future at an exponential rate.   For humans to continue to do so, humans would have to have unlimited power, problem is, humans do not have unlimited power.

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