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...

 

Charts:Bloomberg

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GetZeeGold's picture

 

 

'Half Pregnant'

 

Is that anything like half screwed?

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). ;-)

ori

 

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.

Oh regional Indian's picture

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

ori

Dr. Engali's picture

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

sunaJ's picture

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

Silver Bug's picture

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

 

http://ericsprott.blogspot.ca/

BeetleBailey's picture

No...it's a condom break

GetZeeGold's picture

 

 

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

 

spanish inquisition's picture

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

Caracalla's picture

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

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

MillionDollarBoner_'s picture

Nah...gold should be hammered because we can now all hold Euros again - hooray!

/sarc off

Dr. Engali's picture

A trend soon to reverse in 21 days.

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?

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".

Dr. Engali's picture

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

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.