EURUSD Breaks 1.3200, 4-Sigma Rich To Swap-Spreads

Tyler Durden's picture

Presented with little commentary except to note that EURUSD's inexorable rise has pushed it to over 1000pips rich to the USD vs EUR swap-spread fair-value - or over 4 sigma rich from its three-year mean. Of course, critically, the EUR strength / USD weakness is doing wonders for risk assets, even if correlation had dropped a little. Simply remarkable. Meanwhile, Swiss 2Y rates have seen the biggest 2-day drop (safe-haven seeking flows) in 3 months... So Euro is bid and flows are flying into Switzerland? Doesn't exactly sound risk-on eh? 

EURUSD vs EUR-USD swap spread model...


and Swiss 2Y plunges by most in 3 months...


Chart: Bloomberg

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chancee's picture

ES futures rampathon.

Captain Benny's picture

Fiscal cliff?  What fiscal cliff?

Additional payroll taxes?  Hah, good luck when nobody is working ... and the working people are more likely to not spend further slowing the ponzi^H^H^H^H^Heconomy....

aint no fortunate son's picture

swaps-spread model looks like something out of JAWS... I would note what all the former divergences reconciled to

Banksters's picture

Paper and electronic data entry  money rule our world.     Sad but true.


fonzannoon's picture

dollar selloff equals gold selloff. yup thats how it works.

dirtyfiles's picture

we don't need no education...

buzzsaw99's picture

citifx still has time to be right [/snark]

e_u_r_o's picture

as european I gotta love this  :P

Urban Redneck's picture

If the CHFEUR peg breaks CHFUSD becomes one FUGLY bitch...

tuttisaluti's picture

Dollar down-Gold down

Dollar up -Gold down

QE 3 - Gold down

QE 4 - Gold down etc

Fiscal cliff solved - Gold down

Fiscal cliff not solved - Gold down


whats up guy's ????????

Confundido's picture

gold is still trying to establish itself as money. That's what's up, plus below market lease rates, under the table, provided to the cartel by central banks to dump the price.


malikai's picture

I think gold sorted out that whole 'establish itself as money' thing a few thousand years ago.. But who'se counting really?

Orly's picture

Gold is a risk asset that is quickly losing its lustre.


Spitzer's picture

So that means its not a bubble right ? Yep

Look at gold stocks... Do they look like home builder stocks pre housing collapse ?

keep buying those treasuries

Spitzer's picture

Yes Bernanke, we know this

EL INDIO's picture

This is not Bernanke, he would’ve said it’s a tradition thing

This must be Roubini

JimBowie1958's picture

Yeah, that must be why every nation on the planet is hording gold and checking their inventories to make sure it is really there.

Meanwhile the market 'experts' tell fools like you that gold is losing its luster so they can buy it off you at a discount.


Bay of Pigs's picture

Risk asset? In a 12 year bull market? Put the crack pipe down Orly.


debtor of last resort's picture

Gold is the Road Runner that will give a wink to Wiley Coyote in Wileys last manipulation.

EL INDIO's picture

Be cool, Gold is doing its thing.

If it is down it has nothing to do with the news or the clowns in DC.

Things might look weird on a short time frame but the fundamentals always win on long term basis.

So just be cool and enjoy the holiday sale.

Are you buying ?

fuu's picture

She's waiting for $1,530/oz in 2013.

Orly's picture

$1564/oz. before the end of January...

David99's picture

The biggest manipulated stock is Rio Tinto and JPM is pulling up daily and no regulations for Rio Tinto in London

ivana's picture

Something really bad is brewing ... think we are due for another engineered mega financial shock crisis

David99's picture

The market is Casino and the biggest manipulated stock is Rio Tinto and JPM is pulling up daily and no regulations for Rio Tinto in London

Ness.'s picture

WTF is going on withthe EUR?  Did I miss something or is it just the instrument of today's manipulation?

Orly's picture

You've apparently missed the fact that the Euro is easily the most manipulated asset on the planet and has been for many, many months.  It seems like this is the ramp before the boom is lowered.

According to my charts, the massive unwind should take place in about three weeks, give or take. Until then, the EURUSD and GBPUSD look to be moving rapidly higher, while the USDJPY retraces and consolidates.


mktsrmanipulated's picture

euro ...what about the usd

Orly's picture

They are using (your...) USD to prop up the Euro.

Fed accounts: Other Holdings...

fuu's picture

"You've apparently missed the fact that the Euro is easily the most manipulated asset on the planet and has been for many, many months."

The US bond market called and said you were being disingenuous. Again.

TideFighter's picture

Another repayment phase to the Chinese, let them accumulate the shiny.

Spitzer's picture

Euro is the best fiat.

After a year of shit kicking on ZH and the mainstream media, the Euro rises.

Spitzer's picture

comment is -3 and +1 so far..


Dollar bubble

Confundido's picture

Did any one check the intra-day correlation between 30yr treasuries and gold?? Is this the ultimate ccy war between China and the US?? (i.e. You dump our treasuries, and we dump your fucking gold?)

Orly's picture

I think you're beginning to see through this mess.


Spitzer's picture

hows those Euro shorts working for you ? And you have to pay the higher interest rate to short the Euro haha


King Euro

laozi's picture

James G Rickards never doubted the € would come through. He has been correct on so many things lately. Better than anyone I've read actually.

fonzannoon's picture

if that is the truth the US is totally fucked.

Orly's picture

No, that would be the Chinese...

fonzannoon's picture

no point in debating. it's going to be interesting to see. 

Bay of Pigs's picture

You needs facts to debate fairly and Orly ignores the facts.

Almost Roboesque in her posts.


laozi's picture

@orly you usually make sense. How can you think China will lose if they dump T-bills for gold? Will they go broke when they no longer get the 1% return? Or is it that gold will go worthless because deflation will last until 2030? Enlighten us.

Orly's picture

They can't dump their Treasury holdings unless they start a massive cascade of selling, in which game they lose big.

They have quietly been amassing gold, made available by the illustrious Mervyn King, at ever-higher prices.  If they start selling, they start a cascade of selling, in which game they lose big.

Now, we have the Chinese holding gigantic amounts of severely over-valued assets, just as their inflation starts to kick up, thanks to their accounting machinations, at the same time their economy cools and millions of people are looking for a job.

I'll give you one guess as to what happens next...

laozi's picture

They cant dump T-bills en masse, but they can stop buying, which should be bad enough.

I dont know what overvalued assets you talk about, do you mean the all the debt of the provinces?

Just came back from Hong Kong and the housing market is overheated there. Inflation is already a big problem in the major cities, if that is what you mean...?

Orly's picture

They have already stoped buying T-bills and have shifted their focus to precious metals.  That means they have over-priced Treasuries and over-priced rocks on their balance sheet.

Once the Fed feels like it, it can pull the rug right out from under the Chinese, leaving them high and dry, their population unable to find work and the price of rice going up a penny a day.  Certainly not a good situation.

What I meant about their debt was the central government of China has pushed the debt off into the provinces and the municipalities and the bosses there are doing their best to preserve what they can for themselves and their monkeysphere.  They are lying to the central commitees about their economic perfomance while stashing away millions in overseas accounts.

The entire scheme has been about bringing down the Communist Chinese without having to nuke a billion people.  The Fed is doing it the old-fashioned way: economic warfare.

fuu's picture

"Once the Fed feels like it, it can pull the rug right out from under the Chinese, leaving them high and dry, their population unable to find work "

Lulz, suddenly the rest of the world is going to start making things again? Because the Fed said so?

laozi's picture

Hmm. I understand some parts of what you say.

By pulling the rug, would that be to inflate the $ so that inflation lands in China?

But I do not understand how the Fed can create unemployment in China?

In my book gold is not yet an inflated asset, but that is of course discussable. Anyway, the US has much more of that asset.

Orly's picture

"Anyway, the US has much more of that asset."

But the US has its wealth spread out over many assets, whereas the Chinese wealth is much more concentrated in these two things.

The US cannot cause Chinese unemployment directly.  What it can do is export inflation to China by way of increasing commodity prices, for example, and the Chinese economy will slow naturally.  The stall speed for an increase in Chinese GDP to avoid an economic stall is almost upon them and any added slowdown from here may cause their system to buckle, leaving millions across the country looking for work where there is none to find.

With higher commodity prices, the price of basic foodstuffs for the Chinese populace, for which they spend a far greater amount of their monthly income than Americans do, will increase rapidly.  Food riots and job riots would not be far behind and that is something the Chinese government fears most of all.

As far as gold being in a bubble or not, it doesn't matter.  The Fed's minions at JPM/Chase and Goldman-Sachs can crash the price of gold just about on cue because the market is so thin and who owns what is so vague that it would be relatively easy to remove all support from gold and watch the price tank.