Markets Close Higher As Japanese Exodus Sparks European Bond-Buying Frenzy

Tyler Durden's picture

While Japanese stocks plummet further during the admittedly thin European day session extending their losses from the Japan day-session, it seems the cats have been herded to the next high beta junk market - European sovereign bonds. Spanish and Italian bonds rallied 12bps today for their best day in over a month! European stock markets also benefited from Mrs. Watanabe's scramble ending the day up around 1% (Italy +1.4% despite Grillo's comments on the inevitability of a debt restructuring). Amid all this euphoria, European corporate and financial credit markets were not playing along at all. US equity futures got a helping hand from a ridiculous shunt in AUDJPY and CADJPY (FX carry) which lifted S&P futures 10 points off overnight lows. Treasury futures drifted tick-for-tick lower with S&P futures gains (implying around 3-4bps rise in yields). Obviously volumes were light and markets were thin. The USD is ending unchanged as JPY corrects lower and AUD higher but Gold and Silver are up 0.5% and 1.2% respectively.


Japanese weakness continues -


so the cats herd into another market... European Sovereign spreads have best day over a month...


European stocks gained around 1% on the day but credit markets were not as impressed.

In the US, Treasury futures ticked lower in price with each tick higher in S&P futures..


and the ramp in US equity futures is clear with the kink at around 10ET due to the Bank of Israel's rate cut...


Charts: Bloomberg

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Arius's picture

they are not day traders - in the long run AAPL is a great investment ... after all everyone will want eventually another ipad ...

buzzsaw99's picture

they just want the aapl access codes the same way they got the bill gates back door microsoft codes

Bearwagon's picture

I have a feeling that tinfoil just won't do the trick this time ... I need a massive goldhat!

Silver Sativa's picture

I'm still kicking myself for not coming up with "24-carat gold tinfoil hat."

unwashedmass's picture

you have to wonder if and when, if ever, the US media is going to report on King Abdullah......


buzzsaw99's picture

there are an[sic] hundred more abdullahs waiting in the wings. They are clones, indistinguishable from one another.

ar01's picture

I laughed a bit when I saw this headline: "EU Stocks Close Higher in Thin Trade, Boosted by Fiat"

Which fiat? 

smacker's picture

"Spanish and Italian bonds rallied 12bps today for their best day in over a month!"

There's nothing more tasty for breakfast than Spanish/Italian bonds, lightly covered with Red Pesto and served as a toasted sandwich! A large glass of Rioja or Chianti to wash it down tops it off :-)

yummy yummy!

PontifexMaximus's picture pesto, your collegues will also enjoy it, I am with you, offering a nice levy grappa as a digestive.....

smacker's picture


We shouldn't leave our attention-seeking French friends out of this buying party else they'll begin screaming uncontrollably and set fire to everything in sight!

Let's scoff some nice French bonds, stuffed with delicious runny Camembert, lightly toasted and served with a tall glass of iced Pernod. M Hollande will surely be ecstatic.

Kreditanstalt's picture

This absolutely desperate big player dash-for-trash scramble for any paper yield at all resembles a gold pan in action: as the pan is tilted this way and that, the water sloshes from side to side and back and forth, searching for the safest low place in the pan...

Jump, you f---ers!!!!

disabledvet's picture

gotta overlay this with currency action which has been OUT OF CONTROL now for the past few weeks. Swiss franc has been getting crushed...along with the yen! aussie, canadian dollar...rolling over. euro coughing up a hairball. "all eyes on London." massive trading dislocations that are probably too large to paper over right now. Hong Kong and Singapore dollar look good because they are pegged or used the US dollar as a do a few south american countries actually. "they're becoming rich too." if a large Japanese or east Asian financial institution is about to collapse...or Japan itself hyperinflates!...this thing will have MASSIVE knock on effects. the loss of liquidity will be staggering...prices will start to not just fall but collapse...the Fed will go all in on "QE: the Mr. Universe Edition." or...the Fed could taper as well...hmmmmm.

LawsofPhysics's picture

Wait what?  hyperinflation and prices start to fall.  My service check contains no LSD, for what branch did you serve?  Clearly, the ARMY is not as well funded.

Mario55's picture

Does it make sense to attribute the italian and sapnish bonds rally to japanese buying when the yen is continuing its correction upward against the euro?

Atomizer's picture

As the Nikkei undoing continues, white elephant support levels will be activated. EU will back drop a short-term arrangement to nurture quick fluidity peasantry encouragement.

Leave no Central Planning comfort blanket behind.


The Fall of Rome - Comfort Blanket

MFLTucson's picture

ahaaaaaa!  This is funny to watch.  The global con show!

Arrowflinger's picture

When all of those worthless Japanese Bonds get dumped in the lap of the BOJ and the proceeds flow directly into gold and silver, bypassing the doomed $$$$, the ride will be spectacular.