Greece

10 Year Bond Shakedown Continues: Rate Hits 2.873%

It's all about rates this largely newsless morning, which have continued their march wider all night, and moments ago rose to 2.873% - a fresh 2 year wide and meaning that neither Gross, nor the bond market, is nowhere near tweeted out. As DB confirms, US treasuries are front and center of mind at the moment.... the 10yr UST yield is up another 4bp at a fresh two year high of 2.87% in Tokyo trading, adding to last week’s 20bp selloff. As it currently stands, 10yr yields are up by more than 120bp from the YTD lows in early May and more than 80bp higher since Bernanke’s now infamous JEC testimony. We should also note that the recent US rates selloff has been accompanied by a rapid steepening in the rate curve. Indeed, the 2s/10s curve is at a 2 year high of 250bp and the 2s/30s and 2s/5s are also at close to their highest level in two years.

Latest Greek Corruption Scandal Costs New Privatization Agency Head His Job

For the past five years Greece, stuck in its worst depression in history with two-thirds of work eligible youths unemployed, has been actively blaming all of its problems on "(f)auxterity" even as we said all along that the Greek problems have nothing to do with how much money its government spends and everything to do with corrupt, complicit and frequently criminal politicians. Today we got the latest confirmation that we were correct after the Greek finance minister Stournaras asked for the resignation of the Greek privatisation agency chief, Stavridis, following a newspaper report that he traveled on the private plane of a businessman who just bought a state company with Stavridis' blessings.

Fidelity Asks How Long Can Draghi's Bond-Buying Bluff Hold?

Draghi is a clever man in charge of a pretend central bank (for it’s only equipped to fight inflation, not a banking-turned-sovereign-debt-and-unemployment crisis). He must guess that bond investors will soon figure out that a stateless central bank defending a stateless currency is so hamstrung politically that it carries far less firepower than, say, the Federal Reserve has over the US economy and US dollar. If his outright-monetary-transactions bluff collapses, he may well have other tricks ready to suppress yields on struggling sovereign debt and save the euro (without which there is no need for the ECB). If Draghi is out of surprises, he can be thanked for buying time for politicians to come up with durable solutions to the eurozone’s woes. Oh, that’s another flaw with Draghi’s scheme; it removed the pressure for politicians to act. So they haven’t.

Thursday (Un)Humor: The IMF's European Growth Expectations

With all the excitement over France and Germany's emergence from recession based on this morning's advance first-guess GDP data - a recovery-less recovery the likes of which the US has been languishing in for years - we thought it worth a reminder of the hopeful hockey-stick growth embedded in the IMF's forecast for the European Union. Assuming that Europe is still clinging together in 2016, we present the IMF's dreams of the future.. and most intriguingly the OECD's forecast that Germany will grow at a mere 1.1% for the next 50%.

Picturing The Dis-United States Of Europe

With calls for a European renaissance and a general belief in stability through the German elections, it is perhaps worth a reminder of the structural problems that the supposedly bottoming union is facing. Nowhere is that single monetary policy-facing dilemma more evident than in the massive economic growth divergences across the EU nations and the current huge gap in unemployment rates from Greece to Austria and beyond. It seems the world is waiting for Merkel's re-election and fold on austerity (seemingly confirmed by the leaked BuBa report recently) but EU stress test transparency may remove the symbiotic safety net of bank bond buying sooner than many believe. With monetary policy somewhat euthanized across the EU, what's left for the fragmented transmission channels but more promises as pension funds and banks are stuffed to the gills with their own domestic bonds.

Europe's Riskiest Bonds Rally Most In 3 Weeks To 2 Year Low Spreads

Peripheral bond spreads have rallied for 10 of the last 11 days. At a mere 269bps, Spanish bond spreads are the lowest in 2 years; Italian spreads (at 240bps) are the lowest since July 2011, and even Portugues bond spreads compressed 15bps today to near 2-month-lows. Since mid-July, it is clear that hot-money flows are charging into peripheral European bonds and not into US equities. European stocks (mostnotably the worst economically) have also risen (Greece +21%, Spain/Italy/Portugal +11.5%) but most recently it is the bonds that have seen the major flows.

Pivotfarm's picture

We hear day in and day out that the economy here is going down the tubes, that the banks there are tying up the markets and exploiting them and that China is contracting, that Greece will be the ruin of the already-ruined European Union and the so the list goes on

Of Plain Fools And Wall Street Fools

In the world these days the markets often believe the rhetoric. This would be political rhetoric, corporate rhetoric or the prayers and hopes of the talking heads. This is especially true in the equity markets. Critical advice in this environment is, "forget what they tell you; just look at the numbers." So what is the Fed doing? As of July 31, 2013 they have parked $1,157 billion in foreign banks as compared with $1,112 billion in U.S. banks. To us this is a telling sign. The European banks are in trouble and the Fed is propping them up. One of the consequences of tapering, when it comes, may well be less available cash for this task and then the cracks in the European banks may well blow into gaping holes... "There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time."

Equity Futures Slide More On Resignation Taper Is Just Around The Corner

Despite an overnight surge in the Chinese markets, with the Shanghai Composite closing up 2.4% following reports that China will not only continue with its "liquidity tightening" operation by, paradoxically, cutting RRR for smaller banks, but launch a stimulus for several Chinese provinces and city governments "on the quiet" in the form of jumbo-sized bank loans, and GDP news in Japan that were so bad they were almost good (although not bad enough to close the Nikkei in the green) US futures continue to take on water following the second worst week of 2013 as the market now appears resigned to a Taper announcement in just over 5 weeks (as we have claimed since May). News in Europe continues to be bipolar, with the big picture confirming that only dark skies lie ahead following yesterday's news that a new Greek bailout is just around the corner, or rather just after the Merkel reelection (even though Kotthaus perpetuated the lies and said a second cut in Greek debt is not on the agenda - although maybe he is not lying: maybe only Greek deposits will be cut this time), offset by on the margin improvements in the economic headlines, even as credit creation remains not only non-existent but as the FT reports (one year after Zero Hedge), some €3.2 trillion in financial deleveraging is still on deck meaning an unprecedented contraction in all credit-driven aggregates (one of which of course is GDP).

Internal Bundesbank Report Predicts New Greek Bailout In Early 2014, More Headaches For Merkel

An internal Bundesbank document discovered by Der Spiegel states, in opposition to the comments by Germany's electioneering Chancellor Merkel, that Europe "will certainly agree to a new aid program for Greece" by early 2014 at the latest. As Reuters reports, Frau Merkel has repeatedly played down suggestions Greece will require more aid (or debt relief) in light of German voters major skepticism over moar of their money being flushed into the Mediterranean. The document notes that the risks of the current aid package for Greece are "extremely high" and that recent approval of the tranche payments were politically motivated - directly contradicting Merkel's 'praise' for Greek efforts as the report concludes Athens' performance as "hardly satisfactory." Opposition parties suggest Merkel is throwing "sand in the eyes" of the electorate as the Bundesbank warns "there is no private buffer left that could protect the European taxpayer."

The US Economy Grew Fastest With No Fed And No Income Tax

How would America ever survive without the central planners in the Obama administration and at the Federal Reserve?  What in the world would we do if there was no income tax and no IRS?  Could the U.S. economy possibly keep from collapsing under such circumstances?  The mainstream media would have us believe that unless we have someone "to pull the levers" our economy would descend into utter chaos, but the truth is that the best period of economic growth in U.S. history occurred during a time when there was no income tax and no Federal Reserve. We never needed a central bank, we never needed the IRS and we never needed an income tax.  America would be doing just fine without any of them. But instead, America chose to go down the path of collectivization and central planning, and now we are heading toward the biggest economic disaster in the history of mankind.

Pivotfarm's picture

Greeks Bum Out Again

The Greeks have been in recession now for six long years. While economies around in neighboring EU countries seem as if they are shining with just a glimmer of hope that the recession is over, the Greeks are not partaking in any of that.

Pivotfarm's picture

When it was suggested it was considered in the blazing battles of the bail-outs and the scraping of the bottom of the drawers for extra cash as the God-sent answer to all EU woes and worries.