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European Sovereigns Weaken Further As Pattern Emerges

Tyler Durden's picture





 

European sovereign bond spreads weakened notably today - extending losses from yesterday - ending the day unchanged to slightly wider on the week. There has been a rather notable pattern though emerging in the last week as from the US Open to EU Close, we see bonds consistently sold off. EURUSD pushed up above 1.30 on a decent stop-run amid Draghi's words. It seemed Draghi was a little less dovish than in recent days - no rate cuts, more pain for Portugal, no concessions on Spain. European equities underperformed European credit for the second day in a row - playing catch down as financials underperformed.

 

European Sovereign bond spreads - can you see the pattern?

 

even as the EUR levitates...

 

Charts: Bloomberg

 


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Thu, 10/04/2012 - 11:44 | Link to Comment Mongo
Mongo's picture

Is this the levitation technology the US Army worked on, now being used by central planners?

Thu, 10/04/2012 - 16:03 | Link to Comment MillionDollarBoner_
MillionDollarBoner_'s picture

Hey Super-Mario! Yous' aint printin's fast enoughs !;o)

Thu, 10/04/2012 - 12:01 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Seems like the central planners have it backwards.  Don't you want to devalue your currency when paying back debt via inflation (rent to the ruling class)?  What is wrong with these guys?

Thu, 10/04/2012 - 12:07 | Link to Comment Alea Iactaest
Alea Iactaest's picture

I am curious, too.

Today we have ECB and BOE (non) announcements. Tomorrow is BOJ. Yet pretty much nothing hitting the airwaves.

Meanwhile credit unhappy, equities and PMs joined at the hip, and USD weaker.

What's wrong with this picture?

Thu, 10/04/2012 - 12:11 | Link to Comment GaryNeville
GaryNeville's picture

The only question now is whether AAPL and the whole US stock market can levitate into close as its manged to do the last X number of days..... Wall Street to take out 16,000 anyone?????

Thu, 10/04/2012 - 12:37 | Link to Comment LawsofPhysics
LawsofPhysics's picture

How much longer until TVIX becomes a "penny stock"?

Thu, 10/04/2012 - 12:48 | Link to Comment OldE_Ant
OldE_Ant's picture

Looks like the USD is winning the race to the bottom to me.

If I was a betting man I'd say when all the wagers are added up the winning play is USD down against all currencies, US markets up.  This also has the bonus of screwing the EUR against USD shorts. (and wreaking havoc in all economies - particularly Europe).   Then when enough shorts on the above trades are wrung out and European pain is the deepest the ECB makes its announcement and the USD rises, EUR falls, european markets rise, and since US markets are relatively controlled and looking towards Europe they stay flat while all this goes on, further infuriating anyone short any USD stocks.

When one has virtually all major commodity prices under control the above is just FRN foreplay for the bigger orgy coming.

ENd of LiNE

Thu, 10/04/2012 - 13:53 | Link to Comment whirlybird rules
whirlybird rules's picture

Draghi is insane.  This was not going to end well but Draghi is reaching too far.  We are supposed to think that he has the Goldman touch and that somehow, they can bend everything to their will but the problems in Europe are not short term, they are structural.  Nothing Draghi is doing will resolve the individual country structural issues.  Everything Draghi is doing will leave the people of Europe buried in mountains of debt for generations.  Or, at least until the populations of European countries rise up to cancel their debt obligations.

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