Swiss 2Y Hits 2-Month Lows But 'Misinterpreted' EURUSD Surge Drags Stocks Off Lows

Tyler Durden's picture

Following the dismal PMIs this morning, most EU equity indices were declining. From around the open of US equity markets, EURUSD began to levitate as the 'bad' news hit Cyprus Popular Bank being 'restructured', no deal with Russia, and ATM lines mounting. Of course, the machines interpreted EURUSD's rise as a positive and European equities (and US equities) got a lift into the EU close. We suspect, in reality, this EUR strength is very different and given the surge in demand for Swiss 2Y rates (now at 2 month lows), EUR-USD basis swaps, and European sovereign bond markets in the last hour, it would appear this is very much repatriation flows and not 'we love the Euro' flows. European stocks did end the day lower though - catching down to credit's earlier week weakness.



EU Stocks bounced into the close of the week's lows


led by EUR strength...


Charts: Bloomberg

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nasdaq99's picture

how euro positive is this?  theywill all move to london now:


BRUSSELS — European Parliament lawmakers are seeking to introduce a limit on the bonuses that investment fund managers can receive.

The draft law approved by the parliament's economic committee follows legislation that limits bankers' bonuses to a maximum of twice one year's base salary.

Leading lawmaker Sven Giegold said Thursday the 6.3 trillion-euro ($8 trillion) fund industry must be regulated in the same way to provide a level playing field.

But unlike the bankers' pay limit, which is set to be voted into law next month after a final agreement struck Wednesday, this initiative is still at an early stage. The full Parliament will vote next month on whether to launch negotiations on the issue with representatives of the EU's 27 members and the European Commission.

knukles's picture

Thank God everything's all fixed.
I was gettin' ready to panic.


(no I wasn't trying to get cutsies in front of you because the machine was running out of cash, I'd just gone to... ouch!... stop hitting me....)

Careless Whisper's picture

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TruthInSunshine's picture

Bernanke will throw everything imaginable towards at least keeping equity markets from collapsing.

The "Virtuous Circle" macroeconomic/monetary policy thesis, no matter how idiotic, is all that he "has," and all that exists in the form of a metric (no matter how meaningless) to use as any type of "progress" report (as reported on each evening by the Lame Stream Media, especially the 30 ticker Dow that is frequently splashed across the teeeeeveee screen).

If equity markets have a significant correction, Bernanke will immediately come under intense scrutiny and even many more now-cognitively-dissonant sheeple will begin to understand the basic folly of the Virtuous Circuity and start asking the types of questions they haven't yet asked (even brain dead "investigative journalists" on 60 Minutes).

When equity markets crash again, Bernanke goes from "hero to zero" in a nanosecond.

McMolotov's picture

Like I said yesterday, it's all about saving face and helping the well-connected steal everything possible before the collapse.

Lore's picture

You're convinced of a nominal crash?  I could see a real one, but will it show up in nominal numbers?  Nobody seems to know just how 'goosed' and deceitful this market is truly become.  Can you imagine a sinister scenario that sees numbers rising endlessly, a la Zimbabwe?  (I'm reminded of Kyle Bass comment re: portfolio shooting up but only retaining enough real value to pay for "three eggs.")

It is remarkable that any long term investor still participates -- even more remarkable that the masses continue to pile in. This could be setup for the first great haircut of the century.

Yen Cross's picture

    Someone keeps stepping on the $. Everytime it starts to strengthen, it gets thumped back down. Probably European banks selling their $ swaps/excess reserves for euros to load the ATMs for the w/e.

swissaustrian's picture

AEX is outperforming everything!

lotusblue's picture

Fed sending pallets of bennies to ECB-they're buying EUROs to support EU from collapse.

magpie's picture

at least those dont take 7 years to arrive