Draghi Gains Evaporate, Europe Ends Week Unchanged

Tyler Durden's picture

So it seems the full decay life of an ECB head is now 25 hours as the gloriously dovish comments from Draghi yesterday (that really said no liquidity withdrawal anytime soon) that spiked stocks up 1-4% across Europe have been battered back to unchanged by a good is bad jobs number in the US bringing the end of the Fed punchbowl ever closer. On the week, Portuguese bonds ended 68bps wider (with Spain and Italy 10bps tighter); Treasuries are underperforming Bunds by a very notable 21bps on the week. Despite stocks being generally unchanged (with Italy/Spain up around 2%), credit markets closed notably wider on the week. EURUSD is down around 200 pips on the week with the last 2 days the worst in almost 4 months.


Draghi gains gone..


and the DAX closes as the big underperformer...


Charts: Bloomberg

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fonzannoon's picture

It's important to sit back and realize that we have gone jumped roughly 100bps on the 10yr bond. We said 2.25% was ridiculous. 2.4% was WW3 and 2.5% was the end of the world.

Yet here we sit at 2.7% with a side of crude at $102.50/107 Brent

This is fascinating.


ghostfaceinvestah's picture

Some industries, like the mortgage finance industry, are going to see bloodshed.  Refis are going to dry up.  From selling to processing to underwriting to hedging rate locks to secondary marketing, there are probably a dozen people who touch each mortgage refi - 2/3rds of them will be redundant as the refi share of the mortgage market falls below 35%.


ACP's picture

Doesn't matter, the hard-core ramping continues. Watch the SPX hit 1650 on Monday when they blow up all the shorts building up the last week.

French Frog's picture

Absolutely correct but maybe not on Monday, although it's amazing how often people still get caught by it....both sides cleared after NFP -----> let the market drop and shorts build again ------> Dow below 15000 reassures the european shorts -----> the moment Europe closes, the market gets ramped up -----> they will keep it well above 15000 until the close -----> low liquidity will provide the first bout of shorts covering in Asian trade ----> Europe open on Monday will do the rest, with melt-up-tuesday after....people never learn do they!?

SheepDog-One's picture

Yes it's pretty amazing how strong the illusion of the matrix is....for now.

When it all does suddenly implode one of these mornings, I won't feel the least bit sorry for anyone, as the MSM will no doubt parade crying bankrupt pensioners and 401k brigades before the screen crying about their sudden plight and eviction...oh well.

Everybodys All American's picture

I'm shocked that the market even this rigged fiasco can trade higher on this ten yr. move. I don't think it's sustainable unless the Fed is buying the stock market as well.

slaughterer's picture

Wait until the eyes of the market turns to the earnings coming up.  This BS Central Bank hopium cycle will be drowned out by earnings miss after miss.  It would seem wise for every Apple-Fanboy to take heed of the Samsung warning this morning.  As for the banks, the fixed income trading rev. figures will suck--so, unless they release some more reserves, etc. 

EclecticParrot's picture

True, and it's hard to read today's low volume action, blipping down and back up to VWAP (but wait -- the current VIX move suggests either a noon spike up, or a classic fake out).  Unless they're waiting until 2:10 p.m. to start dumping, this could be a case in which the salesman needs to talk to his manager, but everyone's out until Monday, so we let the kids sit in the front seat, inhale the new car scent and pretend to drive.

DormRoom's picture

PIIGs are becoming like Japan-lite due to massive debts, and massive wave of emigrating productive young people.  This will only cause greater structural problems as demographics become destiny.  As the structural problems deepen it will exasterbate the inconsistent NAIRU among the core, and peripheral, which Central bank policy are too blunt to solve.

While in America the Beveridge curves indicats two America: the long term structurally unemployed, and the rest.  Again, the question of incompatible NAIRU among the two Americas, and how Central Bank policies are two blunt to reconcile the problem.

ceilidh_trail's picture

This is why the euro has to die. Floating exchange rate is probably the only thing that will ease the stresses of individual government policies. We saw similar 'emigration' between states here in the 30's.In fact, it still occurs today as people vote with their feet and go where prospects are best. Europe's failure is a common currency among disparate states with different languages and cultures.

101 years and counting's picture

im just waiting for Germany to rule the OMT is not legal and everything to blow up. 

Haus-Targaryen's picture

As much as I'd *LOVE* to see that happen -- I seriously doubt it will.  :( 

SheepDog-One's picture

Wow the bullshit utterances of nonsense can kicking from these figureheads sure isn't lasting like it used to!

Seems now the order of the day is 'sell every rip'!

gjp's picture

Not in the US though. Fedhead bullshit keeps stawks higher and punishes gold. Every fuckin day.

SheepDog-One's picture

We just lost a +150 point morning pump in 2 hours! And good luck with the gold....that will take guts of steel to ride out.

gjp's picture

Don't look now, stawks got over half of it back already.  Gold, comatose on the floor.

ZH timed its 'stocks turn red' post perfectly for the mere minute they crossed the red line, now off to the races, ripe for ramping into the thin holiday afternoon.  Total farce.

jmcadg's picture

CB co-ordination - Mission accomplished. Net net from all the noise.

As for Goldman and Stolper:

"We would go long at current levels of about 1.3060 for an initial target of 1.35 with a stop on a close below 1.28".

Goldman have NO SHAME. Why Goldman have any client's is beyond me.

They deserve each other.

SheepDog-One's picture

All GS 'clients' have to be in some kind of 'Brewsters Millions' situation where their main objective is to lose as much mney as possible.

JJ McApe's picture

draghi is the biggest joke EU...

says on TV: the crisis is over; a few days later ... lowers interest rates to 0.5%


this is nothing more than a sick joke.

usa & eu are eroding from the inside out. or do you think all the unemployed young people will buy homes, cars and new tv's?

give the young generation good jobs and some hope. but unless that will happen everything will go down, fast.

Al Trueman's picture

Can one call it evaporation when it was vapor to begin with ?

jtlien's picture

Fortunately for Draghi, mathematicians tell us that there are many kinds of infinity.

He can announce going to aleph-0 infinity QE so that he is not put into a corner when things go bad after that.

Then he can go to QE aleph-1.   Hope he is boning up on his Cantorian set theory.

One wonders how long this can go on until people realize that it aint working.