Just Say Nein: Bundesbank Rejects OMT (Again)

Tyler Durden's picture


The last few minutes have seen markets taking a decidedly negative stance. Led by FX carry, risk-assets in general are rolling over. Some attributed it to Bernanke waking the devil from his slumber: 


but it appears that the decision of Germany's Top court is the market-moving event:


Instantaneously EUR is tumbling, financials are dropping, and the 'promise' of Draghi's tail-risk killer is perhaps being removed. Remember, the high court is due to vote in June on whether the ESM is constitutional under German law and this rejection of 'OMT' leaves that decision much more in limbo than the market was expecting.



Via Bloomberg:

German Bundesbank comments on the ECB’s bond-purchase program in a confidential opinion prepared for German constitutional court, Handelsblatt reports in an pre-release of an article to be published tomorrow.


  • Bundesbank rejects potential sovereign bond purchases because they would constitute “targeted” acquisitions of securities of “worse credit standards” and increase risks for the central bank: Handelsblatt
  • Bundesbank says outright monetary transactions could undermine independence of central banks
  • Bundesbank doubts that strong conditionality will be imposed on countries in exchange for aid
  • Bundesbank says the Greek experience “is reason for concern that the handling of conditionality within the framework of the OMT rogram, even in questionable cases, won’t protect against significant purchases and thereby against a redistribution of risks across the balance sheets of the Eurosystem”
  • Bundesbank says diverging borrowing costs for companies in different countries  may reflect different fiscal risks of sovereign

NOTE: German constitutional court announced it will examine ECB bond-purchase program

Of course, Draghi can just say 'Yes' to this 'Nein' but the points the court raises for the BuBa are hard to argue with...

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Thu, 04/25/2013 - 15:15 | 3499155 Ahmeexnal
Ahmeexnal's picture

Merkel: "I vas just folloving ordahs!"

Thu, 04/25/2013 - 15:21 | 3499207 NotApplicable
NotApplicable's picture

You down with OMT?

Yeah you know me.

Who's down with OMT?

Every last homey.


Thu, 04/25/2013 - 15:58 | 3499367 B2u
Thu, 04/25/2013 - 15:15 | 3499162 Mongo
Mongo's picture

Nein nein nein, the number of the German beast

Thu, 04/25/2013 - 15:32 | 3499242 Edward Fiatski
Edward Fiatski's picture

Triple Nein Gold? Oh, ja.

Thu, 04/25/2013 - 15:17 | 3499174 Cdad
Cdad's picture

Ah man...I thought someone finally noticed how lousy this earnings season was coming along.  Shucks.

Thu, 04/25/2013 - 15:17 | 3499177 Captain Kink
Captain Kink's picture

Bring back the DM.

experiment over.

Thu, 04/25/2013 - 15:19 | 3499183 Ahmeexnal
Ahmeexnal's picture

They will get the DM alright, the 1923 weimar DM!!!
Time to snatch up K'dam real estate for a few coins!

Thu, 04/25/2013 - 15:21 | 3499199 ParkAveFlasher
ParkAveFlasher's picture

It's hard to back a currency up with gold, if you don't have any gold.

Thu, 04/25/2013 - 15:21 | 3499209 Winston Churchill
Winston Churchill's picture

Exactly.Without their gold zee Germans are trapped in the euro for now,

Thu, 04/25/2013 - 15:26 | 3499221 ParkAveFlasher
ParkAveFlasher's picture

Assuming humanity hasn't regressed to a feral state by then, we could see a DM in about seven years.

Thu, 04/25/2013 - 16:07 | 3499403 Urban Redneck
Urban Redneck's picture

If they get ca get their hands on Portugal's or Italy's they might have enough, when added to what they kept at home and can get out of London & Paris. 

Thu, 04/25/2013 - 15:24 | 3499216 e m m
e m m's picture

Bring back the summer of 2012.

Thu, 04/25/2013 - 15:48 | 3499298 NotApplicable
NotApplicable's picture

DM? I hear ya. I could really use a whole bottle of Robitussin right now!

Thu, 04/25/2013 - 15:16 | 3499178 mattdubz86
mattdubz86's picture


Thu, 04/25/2013 - 15:17 | 3499181 The Dancer
The Dancer's picture

Wondering how much a sizable war will tilt the game....

Thu, 04/25/2013 - 17:32 | 3499746 Tango in the Blight
Tango in the Blight's picture

I hope the US bankrupts itself before it can start WWIII.

No money, no army..

Thu, 04/25/2013 - 15:19 | 3499185 Widowmaker
Widowmaker's picture

Bernanke is the corporate cum-guzzling vulnerability in the financial system.

"No one saw it coming!"

Thu, 04/25/2013 - 15:19 | 3499187 eatthebanksters
eatthebanksters's picture

Ein rulpz das ist ein magen wind, das nicht den weg zum aschloch find...

And that's all I have to say about that...if you catch my drift.

Thu, 04/25/2013 - 15:19 | 3499188 ParkAveFlasher
ParkAveFlasher's picture

This is bullish, right?

Thu, 04/25/2013 - 15:20 | 3499204 Being Free
Being Free's picture

Go AlGo!

Thu, 04/25/2013 - 15:25 | 3499218 q99x2
q99x2's picture

These bankster speak with forked tongue. On the one hand they want to join forces to take over the world through coordinated acts of terrorism and market manipulation on the other hand they don't trust one another and are prepared to do whatever is necessary to protect themselves. That is why there is no world order.

Thu, 04/25/2013 - 15:31 | 3499236 Edward Fiatski
Edward Fiatski's picture

Bad cop/Good cop - (artificial) conflict of opinion is needed in order to generate a crisis, which, surely, should never go to waste.

Thu, 04/25/2013 - 15:34 | 3499251 LawsofPhysics
LawsofPhysics's picture

... and the "club" is getting smaller it woould seem.  when some folks that have access to real power get cheated, then some interesting shit might happen, not before.

Thu, 04/25/2013 - 15:27 | 3499227 Edward Fiatski
Edward Fiatski's picture

What's this "Constitution" you speketh of?

"Bundesbank rejects potential sovereign bond purchases because they would constitute “targeted” acquisitions of securities of “worse credit standards” and increase risks for the central bank"


"Bundesbank says diverging borrowing costs for companies in different countries may reflect different fiscal risks of sovereign"

Ya don't say... WTB Eurobonds.

Thu, 04/25/2013 - 15:32 | 3499243 EmmittFitzhume
EmmittFitzhume's picture

I haven't seen the market move like this since...well since that twitter account hacking.  I guess you can move markets down in two ways!

Thu, 04/25/2013 - 15:37 | 3499267 alien-IQ
alien-IQ's picture

It's 3:30, will the caped crusaders at the central bank swoop in and save the day? tune in and find out kids.....

Thu, 04/25/2013 - 15:40 | 3499278 Edward Fiatski
Edward Fiatski's picture



Thu, 04/25/2013 - 15:38 | 3499269 Devils Advocate
Devils Advocate's picture

Wait here it comes 330 ramp to finish at highs for the day?!?!?

Thu, 04/25/2013 - 15:44 | 3499308 NotApplicable
NotApplicable's picture

Can a brother get a VWAP chart, like all the cool kids got?

Thu, 04/25/2013 - 15:59 | 3499362 RhoneGSM
RhoneGSM's picture

VWAP = last trade from 3:30 to 4:00

Thu, 04/25/2013 - 15:38 | 3499276 Satan
Satan's picture

So the Krauts are insisting that certain EU countries need to surrender just a little bit of sovereinty in order to get things done.

Looks like they are going to have to surrender some of theirs first...

Thu, 04/25/2013 - 17:23 | 3499718 CrashisOptimistic
CrashisOptimistic's picture


To date Draghi has done nothing beyond talking.


The Germans (Bundesbank) opposed the latest ECB policy release saying they WOULD do OMT and buy sovereign bonds; Draghi proceeded with the release, ignoring them.


The German high court can ignore this Bundesbank position, too.


If things got truly ugly Draghi would ignore the German high court and do OMT whether the Germans like it or not.  Essentially dare them to leave the Euro.  They would not -- particularly after the bond yields that caused the "truly ugly" fall as Draghi bids the price up.  At that point you'd have Germany debating on whether to leave the Euro when bond yields are falling, the German stock market is rising and all looks great. 

Thu, 04/25/2013 - 15:42 | 3499281 Schmuck Raker
Schmuck Raker's picture

OK, who gave the Bundesbank a calculator?

No one is leaving this classroom until I find out who it was.

Thu, 04/25/2013 - 15:45 | 3499314 NotApplicable
NotApplicable's picture

Sorry, it was me. But it was Reverse Polish Notation! I thought they'd never figure that HP out.

Thu, 04/25/2013 - 16:14 | 3499428 Urban Redneck
Urban Redneck's picture

Ever try and find Poland on a map of Pre-Woodrow Wilson Europe?

Thu, 04/25/2013 - 17:10 | 3499669 Rustysilver
Rustysilver's picture

Urban Redneck,

Last partition of Poland occurred in 1795: Russia, Germany and Austria took big pieces for themselves.

Thu, 04/25/2013 - 15:59 | 3499361 HD
HD's picture

With Germany being dragged under the waves with the rest of the EU - what's the benefit to staying in the euro now? They have to realize by now that default is the only way out for most of the PIIGS.


Thu, 04/25/2013 - 16:34 | 3499518 Ghordius
Ghordius's picture

solidarity. it's a big word in Germany, Poland and others, no joke

for all the abrasive scruffiness of their politics, ze Germanz don't want to be alone in anything

note that there is no european policy whatsovever for which they don't have partners, and note how often the other big three are isolated, particularly F and UK

Thu, 04/25/2013 - 16:49 | 3499584 HD
HD's picture

 Thanks for the insight - it would have never entered my mind.

America, the super power everyone loves to hate - "solidarity" is never part of the equation.  Pretty much from day one you hear the rest of the world only has three kinds of people. The poor/starving (who need Americas help), The weak/misguided (that need Americas to bring them freedom/capitalism) or the evil (who hate America and want us all dead).

Thu, 04/25/2013 - 16:17 | 3499442 debtor of last ...
debtor of last resort's picture

OK, tungsten repatriation in 23 years instead of 7.

Thu, 04/25/2013 - 17:02 | 3499637 Iam Yue2
Iam Yue2's picture

So the Bundesbank reject something that is in itself nothing more than a confidence trick. You're having a laugh .....

Thu, 04/25/2013 - 21:10 | 3500691 Tenshin Headache
Tenshin Headache's picture

"won’t protect against significant purchases and thereby against a redistribution of risks across the balance sheets of the Eurosystem"

... and since that is exactly what the Eurocrats want to do, that is more or less a full stop from BuBa.

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