EURUSD Roundtrips To Unch As Bonds/Stocks Extend Gains

Tyler Durden's picture

After plunging 50 pips or so on the France downgrade news, EURUSD trickled back up to yesterday's highs just before the US open and is going out at the EU close unchanged from yesterday as French bond spreads are now 1bp tighter on the week (yes tighter). European stocks extended their gains on the day - playing catch up to yesterday afternoon's US equity ebullience but this time corporate and financial credit are not playing along with the exuberance (though sovereigns are better). The Israel ceasefire prompted some modest risk-off interestingly in stocks (though Shekel strengthened) as Oil plunged (Brent relatively underperformed WTI as they both fell).


EURUSD roundtrip...


Brent is relatively underperforming WTI for now...


Stocks gave a little back as oil dropped but in general played catch up to US strength yesterday afternoon...


and European sovereigns are rallying into the close (with Portugal over the moon -67bps this week!!)...


but corporate and financial credit is not playing along quite as exuberantly for now...


Just thinking out loud... the strength in Spanish bonds was odd into the close - especially considering the stability of CDS - and sure enough, it appears we have hit the 'arb' wall on the Spanish bond-CDS basis. As the chart below shows each time we have crossed the 130bps or so mark, hedgies have grabbed the bonds and overlaid protection to snap up the spread. With the 'naked' short rule now in place, this arb was less preferred BUT if correlation can be shown then it is 'allowed' and we suspect that's what supported bonds into the close...


Charts: Bloomberg

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Cdad's picture

I think we are going to have to scratch this morning's US equity volume is laughable again.  But if we can get SPY volumes to absolute zero....well, then we might have a real rally on our hands.

All aboard the steaming pile market! /sarc

Boilermaker's picture

They already are forcing the SPY higher.  401(k) Joe is forming his Christmas shopping list.  Gotta get that 'feel good' sentiment in before Turkey day.

Cdad's picture

Enter FastMoney J. Teranova to explain the extension of the rally.  "They HAVE to be in the market."  Well, now that is truly compelling catalyst.

Good grief...just how transparently stupid will everyone on The BlowHorn [CNBC] get today?  Who will take the trophy for the BIGGEST TOOL?

Boilermaker's picture

What would be the viewership if they said "It's a massive scam and you'll be left penniless.  It's best to not invest in equities"?

It's a mix between one-side financial 'analysis' and professional wrestling entertainment standards.

Boilermaker's picture

Time for the market to take the elevator UP!  RAMMING SPEED!

Wheee....thanks Benny!  You magnanimous bastard.

PUD's picture

HFT provides liquidity..I heard it on cnbc

Boilermaker's picture

See?!  It's really in your own good. You just can't understand all the unlying benefits.

SmallerGovNow2's picture

What cease fire?  Israeli officials deny any such agreement....

Mr Lennon Hendrix's picture

Sorry euro shorts, you will have to wait until America makes a real recovery....

....which will be never.

fonzannoon's picture

Mary Shapiro leaving before the end of her term. whisper rumor in my living room is either Pisani or Wesbury to replace her.

LongSoupLine's picture

Just another day under the algo circus tent...

fonzannoon's picture

Bernanke just went full retard krugman. begging everyone to punt the cliff and raise the debt ceiling asap. 

catacl1sm's picture


catacl1sm's picture

Uh Oh. Bernanke just used the F-word.