Spanish Bonds At Six Month Highs As 'Half Pregnant' Bailout Looms

Tyler Durden's picture


As overseas deposits continue to flood from the periphery (e.g. Italy -15.4% YoY in Aug), yet another European Summit is about to begin delivering headline after headline of baffle-'em-with-bullshit comments. As the market switches from rallying on conditional OMT-backed bailouts (that are not needed according to Rajoy and De Guindos), now it is rallying on a precautionary line of credit (with no apparent conditionality) that Katainen also adds is not needed because Spain doesn't need a bailout. It seems that a 'half pregnant' bailout for Spain is all that it takes as 10Y Spanish spreads dropped below 400bps for the first time in six months and while IBEX is lagging the sovereign's performance for now, it is also having a great week (up over 5%). Thanks to Moody's apparently gutless contingent investment-grade-but-on-the-verge-of-needing-a-sovereign-bailout decision, more rotation from foreign real money to domestic real money and fast money is slapping Spanish credit tighter in a hurry (5Y CDS 278bps and 10Y yield under 5.5%). Now if someone would just explain how any of this has solved the underlying insolvency issues, we'll be more than happy to play along.


Long-term Spanish spreads are back under 400bps, at six month lows, and are at a critical uptrend...


Short-term - post Draghi - sovereign risk and stocks are back in sync - though equities are below their previous highs as spreads are outperforming...



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Wed, 10/17/2012 - 09:18 | 2897699 GetZeeGold
GetZeeGold's picture



'Half Pregnant'


Is that anything like half screwed?

Wed, 10/17/2012 - 09:21 | 2897707 Oh regional Indian
Oh regional Indian's picture

Go one GetZee, tell us how you got this FirstPost gig? Hmmm?

Anyways, when Spain Rains, it'll be hell to pay because Italy/France/UK are much more deeply embedded (both Banks and holiday/second/third home suckers) there. A rippling domino with bull horns to boot.

Pampalona boys and g's. 

Watch your asses (and their bulls). ;-)



Wed, 10/17/2012 - 09:26 | 2897717 GetZeeGold
GetZeeGold's picture



I won the Fightclub sweepstakes......first posting rights for a week.


Thanks Tyler! I'll give you the next one Ori.....get ready.

Wed, 10/17/2012 - 10:19 | 2897905 Oh regional Indian
Oh regional Indian's picture

Nah, thanks GZG, too much pressure. I'll take the reply to first poster position, happily. :-)


Wed, 10/17/2012 - 09:33 | 2897748 Dr. Engali
Dr. Engali's picture

He paid a premium and bought a location close to the Hedge's servers.....he is a High frequency commentor.

Wed, 10/17/2012 - 09:57 | 2897810 sunaJ
sunaJ's picture

In a half pregnancy, you are fully-screwed and it results in an abortion (spontaneous or otherwise), medically speaking.

Wed, 10/17/2012 - 12:23 | 2898224 Silver Bug
Silver Bug's picture

IT's QE to infinity. There is nothing they can do.

Wed, 10/17/2012 - 09:19 | 2897702 BeetleBailey
BeetleBailey's picture's a condom break

Wed, 10/17/2012 - 09:21 | 2897712 GetZeeGold
GetZeeGold's picture



Made in China....what did you expect?


Wed, 10/17/2012 - 09:26 | 2897723 spanish inquisition
spanish inquisition's picture

Nothing was delivered and yet the result was achieved. This was an expert pull out back tat bullseye!

Wed, 10/17/2012 - 09:20 | 2897705 Caracalla
Caracalla's picture

It looks like Europe is fixed now so stocks should be off to the races!

Wed, 10/17/2012 - 09:28 | 2897731 fonzannoon
fonzannoon's picture

the euro is off to the races. i would think gold would be much higher. luckily all this awesome econ data means the fed can shut qe down any minute

Wed, 10/17/2012 - 10:51 | 2898008 MillionDollarBoner_
MillionDollarBoner_'s picture should be hammered because we can now all hold Euros again - hooray!

/sarc off

Wed, 10/17/2012 - 09:25 | 2897720 Dr. Engali
Dr. Engali's picture

A trend soon to reverse in 21 days.

Wed, 10/17/2012 - 09:27 | 2897729 q99x2
q99x2's picture

Banks pay Moody's. They want Obama to be in charge when they start bombing the United States. What does this mean in relation to the argument that conditions of existence tend to perpetuate existence? Might not the edge be a necessary component?

Wed, 10/17/2012 - 09:33 | 2897746 Cognitive Dissonance
Cognitive Dissonance's picture

"Thanks to Moody's apparently gutless contingent investment-grade-but-on-the-verge-of-needing-a-sovereign-bailout decision...."

Moody's understands its role in this farce and it most certainly isn't a show of "guts".

Wed, 10/17/2012 - 09:37 | 2897752 Dr. Engali
Dr. Engali's picture

It doesn't hurt that Obama has grandpa Buffet in his back pocket know that whole "you bathe my back and I'll...".

Wed, 10/17/2012 - 10:20 | 2897908 Shevva
Shevva's picture

Turn your first graph the right way up and you'll see it's just a dead cat bounce. Their hoping that the heavy christian population (ie, 25th Decmeber present buying) will save all of Spain if they can just hang on.

They maybe disappointed on the 26th.

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