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Treasury-Bund Spread Surges To Over Three Year Wides
Today's move in the 10 Year is not being matched by German Bunds. The result: a spike in 10 year UST-Bund spreads to over 90 bps, a level unmatched since mid-2006. Yet one wonders just why the percevied flight to German safety persists, when as disclosed previously, German banks have over half a trillion in exposure in Southern European countries. Should the domino effect of Greece finally materialize, it is difficult to make the case that marginal deterioration within the German banking system can be isolated without major fallout to the very core of the economy.
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THE DOELARR IS CAPITULATING!
"...perceived flight to German safety..."
This is German industry/banking making a demonstration of (policy) approval. It is temporary/symbolic. TPTB in Germany are NOT in favor of subsidizing or otherwise bailing-out debtor states like Greece, so when German policymakers talk tough and refuse to toe-the-line for Brussels, German business demonstrates it's symbolic support...
Germany is the one-eyed king in the land of the blind.
Id say theyre the one-nostrilled jester in the land of the deaf blind mutes.
Apparently Germany has not taken on as much risk as previously thought when the bailout was first announced.
"The financial safety net that euro zone leaders agreed last month to provide for debt-stricken Greece fails the circus test."
"Not only did the agreement specify, at European ringmaster Germany's insistence, that Greece would have to have almost hit the deck before it could be rescued.
But even then, it would require a unanimous decision of the 16 states sharing the single European currency, giving Berlin the final say on whether the safety net is strung out at all."
http://www.reuters.com/article/idUSTRE6340M420100405
Interestingly, those spreads from 2004-2007 correlate perfectly with the housing bubble trajectory, with both peaking at the very top of the bubble in Fall '05 thru Spring '06.
And now here we have another launch in spreads, coming as another bubble gets blown.
Probably nothing more than coincidence because conditions are so different now, especially where the FRB has learned its lessons so well.
Are cash Bunds trading today?
Because futures are def closed. May explain this last part of the move?
bingo winterland......
although, Germany did not take on the risk that most assumed it had taken. Germany played this one shrewdly....
bunds don't trade 2day
Hilarious. DTB is closed for holidays.
FAIL!
epic fail
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