Italy

Frontrunning: November 15

  • Biggest Global Bond Rout Since 2003 Pauses (BBG)
  • Oil prices jump 3 percent on hopes of OPEC output cut (Reuters)
  • Italy polls get worse for Renzi as referendum nears (Reuters)
  • Trump will get wake-up call when he takes office, Obama says (Reuters)
  • With Priebus, Ryan’s Speakership Has Direct Channel to Trump (BBG)
  • Supreme Court now in Trump’s hands (The Hill)

Italian Bond Yields Explode To 18-Month Highs As Deutsche Sees 'Italeave' Odds At 60%

With TARGET2 imbalances at record highs, Italian bonds yields are exploding higher (despite Draghi's foot on the scales) following Trump's populist-encouraging victory just a few shorts weeks ahead of Italy's referendum vote. The probability of reform rejection (and implicitly 'Italeave') is now 60%, according to Deutsche Bank, with complexity due to the country’s growth-banks-politics nexus: disappointing growth, concerns about the banking system and the rise of populist and euro-sceptic parties.

Europe's "Massively Over-Subscribed" Long-Dated Bond Bloodbath

Remember all those super-long-duration bonds that every Tom, Dick, and Henri bought with both hands and feet earlier in the year? Headlines roared of "six time oversubscribed", or "four times oversubscribed" as Draghi and his entourage 'guaranteed' to keep everything profitable - whatever it takes. Well, things have gone a little disastrous in the last few days as Irish and Belgian 'century' bonds, Austria 70 year, Italian and Spanish 50 year bond prices are collapsing.

Kremlin Gains Two More European Allies As Bulgaria, Moldova Elect Pro-Russian Presidents

The good news just keeps going Putin's way. Just days after Trump defeated the Kremlin's nemesis Hillary Clinton, on Sunday pro-Russian candidates won presidential elections in Moldova and Bulgaria on Sunday, giving Moscow new allies in its efforts to regain influence in parts of Eastern Europe it regards as its backyard. And while Russia is the clear winner, one loser to emerge bruised from the two votes is the European Union.

"A Barrage Of Fed Speakers": The Key Events In The Coming Very Busy Week

As markets continue to digest the implications of the US election outcome, there is a host of data and Central Bank communication adding to the running narrative with Fed speakers appearing on every single day of the week. In addition to barrage of daily Fed speakers, including Chair Yellen, we get US inflation data, retail sales, housing data, empire manufacturing, industrial production and the Philly Fed.

'Italeave' Looms As Italian Crisis Indicator Spikes To Record High After Trump Win

"The US election will help all those who have not had the courage to come out and say 'I will vote No'," proclaimed one of Italian PM Renzi's opponents as The FT reports the centre-left prime minister’s referendum on change is threatened by the global populist wave. Even before the US election, he faced a struggle to secure victory in the referendum, with most polls tilting in favor of voting 'No', albeit with many undecided voters, but opponents claim "many undecided voters in the polling booth will say ‘No No No’, just like Trump voters."

Chaos Ensues As Europe Splinters In Response To Trump: UK, France, Hungary Snub EU Emergency Meeting

Britain and France on Sunday night snubbed a contentious EU emergency meeting to align the bloc’s approach to Donald Trump’s election, exposing rifts in Europe over the US vote. Boris Johnson dropped out of the Brussels meeting, with officials arguing that it created an air of panic, while French foreign minister Ayrault opted to stay in Paris. Hungary’s foreign minister boycotted the meeting, labelling the response from some EU leaders as “hysterical”.

Tsunami Warning Issued After Powerful 7.8-Magnitude Quake Strikes New Zealand

A major earthquake whose, initial reported magnitude of M7.5 was initially lowered to M6.6, only to rise up to M7.8 in the latest USGS estimate, struck central New Zealand northeast of Christchurch just after midnight, or 12:02am local time on Monday, (1102 GMT Sunday), the U.S. Geological Survey said, generating a tsunami that hit the northeast coast of the South Island.

The 'Millionaire-Socialist-Class' (Or, Why It's Important To Be 'For' Rather Than 'Against' Something)

"It’s like they take the best America has to offer while giving it the finger at the same time. America’s success has always been it’s economic engine. Those people who work everyday without saying much but who in this election made their voices heard by being ever present and following through.  That is a core American value lost on this “millionaire socialist class” who present contradiction after contradiction in their very way of being."

Bond Bloodbath Continues: Soaring Inflation Expectations Spark Curve Carnage As Yuan Plunges

"I've never seen anything like it," exclaimed one veteran bond trader shocked at the ongoing carnage across the global bond market. 10Y Treasury yields just topped 2.10% for the first time since Jan as inflation expetctaions explode higher post-Trump. Italian bonds are getting crushed, Bunds, Gilts, and JGBs all seeing yields spike as developed market bond yields hit 6-month highs and the US yield is at its steepest since 2015.