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Europe Is Fixed: Spanish Yields Tumble To 8 Year Lows (Below US Treasuries)

Tyler Durden's picture


Is it any wonder Mario Draghi didn't lift a quantitative-easing finger this week? Despite record unemployment, record (and disastrous youth unemployment), record suicide rates, record non-performing loans, and an inextricably-linked banking system facing $3 trillion in exposure to emerging markets... Spanish bond yields have collapsed to their lowest since 2006 (and Italian close behind). With an entirely broken transmission mechanism of monetary policy, it seems the "market" for European bonds knows no bounds as spreads on the riskiest sovereigns drop to pre-crisis levels and 10Y Spain yields are now lower than 30Y US Treasuries.

Europe must be fixed?


Spanish 10Y yields are now back below US 30Y yields for the first time in 4 years...


With the European banks holding the bulk of this crap and facing what many HOPE is a real stress test; we can only imagine the contagion should fears ever re-ignite - though we always have the magical OMT.


It seems much of this exuberance is the hope that a European think-tank expressed that March will see the ECB announce QE... as usual, any minute now.


Chart: Bloomberg


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Fri, 02/07/2014 - 15:14 | Link to Comment So Close
Fri, 02/07/2014 - 15:16 | Link to Comment Fish Gone Bad
Fish Gone Bad's picture

The Fed just buys up everything that is about to collapse and PROBLEM FIXED.

Fri, 02/07/2014 - 15:26 | Link to Comment oleander garch
oleander garch's picture

"It's not you.  It's me."


   Euro said to Dollar.


Fri, 02/07/2014 - 16:04 | Link to Comment Four chan
Four chan's picture

if crazy is acting counter to reality, just how crazy can crazy become,

before the reality of the central money scam gets so out of hand, that reality forcably reasserts itself on the market?

Fri, 02/07/2014 - 18:32 | Link to Comment Peter Pan
Peter Pan's picture

You can ignore reality but not its consequences.

Fri, 02/07/2014 - 16:44 | Link to Comment midtowng
midtowng's picture

This makes perfect crazyland.

Fri, 02/07/2014 - 16:12 | Link to Comment Wait What
Wait What's picture


"The Fed just buys up everything"

might be the most prescient thing i've read since 2009.

that's what's going to happen from here until the end. BOJ will buy ETFs, Fed will buy S&P futures, ECB will buy PIGS garbage, in the name  of 'financial stability'. because it's their 'mandate'. that's how ECB spun the court ruling, it's how they will spin every little hiccup in markets. their reach for power knows no bound when they can interpret the rules to suit their interests.

Fri, 02/07/2014 - 16:25 | Link to Comment CrimsonAvenger
CrimsonAvenger's picture

Agreed. But can somebody help me understand how that's going to play out in the real world? I get the theory that we'll all lose confidence (I lost it quite a ways back). But who stands up points at the emperor? Anyone who issues debt is in on the racket, so don't expect government or business to stop dancing. What's the trigger going to be?

Fri, 02/07/2014 - 19:07 | Link to Comment MisterMousePotato
MisterMousePotato's picture

Please, oh, please, someone answer this question.

Put another way, could this go on for decades yet? Forever? Why not?

Fri, 02/07/2014 - 17:03 | Link to Comment EscapeKey
EscapeKey's picture

i thought it were the spanish public sector pension funds buying all the spanish iou's.

anyone know this run rate, and when they hypothetically were to run out of "good" assets to throw after "bad"?


Fri, 02/07/2014 - 15:14 | Link to Comment Flying Spaniard
Flying Spaniard's picture

Woohoo it was all just a bad dream /sarcasm

Fri, 02/07/2014 - 15:50 | Link to Comment edotabin
edotabin's picture

Yes but it's recurring

Fri, 02/07/2014 - 15:13 | Link to Comment Rising Sun
Rising Sun's picture

and the only ones buying these shitbag bonds are the central banksters


happy ending anyone??


Fuck you Janet Rottenbox!!!!!

Fri, 02/07/2014 - 15:22 | Link to Comment yogibear
yogibear's picture

Anything large enough to matter the Central Banks will back you up.

Too big to fail is alive and well.

If your a huge bank you want to extract income and profts and book losses. When the losses get big enough the Central Banks bail you out. Rinse and repeat.


Fri, 02/07/2014 - 15:48 | Link to Comment Henry Chinaski
Henry Chinaski's picture

Returns reflect risk. Bailouts and Bail-ins! Bitchez.

Fri, 02/07/2014 - 15:15 | Link to Comment youngman
youngman's picture they need to give Jamie Diamond another raise.....

Fri, 02/07/2014 - 15:17 | Link to Comment 101 years and c...
101 years and counting's picture

and why shouldnt they be at record lows?  afterall, there's the imaginary back stop in the OMT. 

Fri, 02/07/2014 - 15:18 | Link to Comment youngman
youngman's picture

Maybe they have a MYRA already

Fri, 02/07/2014 - 15:21 | Link to Comment Major Major Major
Major Major Major's picture

Does Spain have any stolen gold left?

Fri, 02/07/2014 - 15:27 | Link to Comment SAT 800
SAT 800's picture

You need to look up the history of the Spanish National Bank gold reserves; they sent them to Moscow during the spanish civil war; so the Nationalists wouldn't capture them. Stalin laughed out loud, and said, "they'll never see that gold again"; and they never did. Beyond help.

Fri, 02/07/2014 - 15:42 | Link to Comment Major Major Major
Major Major Major's picture

thank you for answering my rhetorical question.  truly appreciate the insight, though.

Fri, 02/07/2014 - 15:45 | Link to Comment TheGardener
TheGardener's picture

Never had, Spanish armada ships with gold loot always had London as the final destination to repay debt.

Fri, 02/07/2014 - 15:17 | Link to Comment Silver Bullet
Silver Bullet's picture

Spanish and Italian banks must be gorging themselves on their own sovereign paper. Combined with everything else and no tangible capital, I'm sure this will end well.

Fri, 02/07/2014 - 15:19 | Link to Comment Dr. Engali
Dr. Engali's picture

There isn't a damn thing that can be priced accurately in this centrally planned shit show. 

Fri, 02/07/2014 - 15:24 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Yep, now everyone needs to pay attention to the spice flows.

Fri, 02/07/2014 - 15:19 | Link to Comment Rainman
Rainman's picture

Try as I might I just can't see how this turns out well < smells like peak desperation >

Fri, 02/07/2014 - 15:19 | Link to Comment max2205
max2205's picture

Pouring money into zafe investments is common during times of stress ...right

Fri, 02/07/2014 - 15:20 | Link to Comment GVB
GVB's picture

Up until now. EM turmoil & US debt ceiling probably channels investors towards Europe I guess. Dumb fucks.

Fri, 02/07/2014 - 15:21 | Link to Comment RealityCheque
RealityCheque's picture

This is going to end so badly....

Fri, 02/07/2014 - 15:58 | Link to Comment Wait What
Wait What's picture

what makes you think this is going to end? in our lifetimes?

Fri, 02/07/2014 - 15:23 | Link to Comment LawsofPhysics
LawsofPhysics's picture

See, central planning works.  (Especially if one is made bankrupt, dissappeared, or suicided for saying otherwise)

Fri, 02/07/2014 - 15:23 | Link to Comment Spastica Rex
Spastica Rex's picture

Just be patient and trust in our masters. They know what they are doing. Perhaps the past five+ years have been a little... artificial, but any minute now, all these shenanigans are going to pay off.

  • Natural, perpetual 3%+ YoY growth will return.
  • FF energy will once again be plentiful and fairly priced.
  • Revolutionary innovation in products and services will amaze the world.
  • 1 ton pickups will come standard with 1,000 HP engines and get 30 MPG highway.
  • 300 inch class TVs will hang on every wall.
  • The average home in the US will be over 12,000 sqr ft.

And if not, well, things will be fine for the top 20% anyway.

Any minute now.



Fri, 02/07/2014 - 19:28 | Link to Comment TBT or not TBT
TBT or not TBT's picture

Will Cosmo come up with new hot orgasm tricks?

Fri, 02/07/2014 - 15:24 | Link to Comment yogibear
yogibear's picture

The Central Banks are encouraging criminal behavior. They'll just bail you out if your big enough.

Fri, 02/07/2014 - 15:26 | Link to Comment The Axe
The Axe's picture


Fri, 02/07/2014 - 15:28 | Link to Comment delivered
delivered's picture

I'm not sure what to even think anymore as the amount of money that's floating from the CB's to their proxy banks into this garbage must be much larger than anyone can imagine (to produce yields like these). The greatest experiment from the world's CB's over the past 100 years will surely not end well. But can anyone with half a brain outlast the dirtbag CBs and their endless manipulation of the markets? 

BTW and for everyone wondering about when hyper-inflation will set in, we've already got it - In equities, credit, and now across multiple emerging markets (from South America to Africa to Central Asia). This is by far the greatest economic war that has ever been fought between the CB's efforts to inflate the debt problems away and the incredible forces of debt deflation that have firmly taken hold. My money is on debt deflation but its still going to take a while for this finally gain the upper hand and force the CBs to throw in the towel.

Until then, everyone is just going to have to deal with these constant WTF moments but should remember one key fact. The more frequent the WTF moments and events occur, the closer the system is to finally breaking.

Fri, 02/07/2014 - 15:28 | Link to Comment SAT 800
SAT 800's picture

I wonder how they got those interest rates to do that; it' almost like a magic trick. I can't think of any way it makes any sense.

Fri, 02/07/2014 - 15:32 | Link to Comment Jason T
Jason T's picture

utterly confusing which makes for this year to be a wild one for sure.  

Fri, 02/07/2014 - 16:04 | Link to Comment TheGardener
TheGardener's picture

I was pessimistic on ZB`s some years ago that they just would have to stick together to devalue currencies consistently concurrently and the race to the bottom would be a smooth one and no one would really notice.

Than I got enlightened, there must me an inherent good to
make flocks and entities stick together . Common evil
as in the debasement of money will not qualify.

Fri, 02/07/2014 - 15:35 | Link to Comment khakuda
khakuda's picture

The most laughable part of this is that they believe they are doing the right thing by causing the most important prices in the market to be incorrect for years now.  These are supposedly bright economists telling us that the path to a better economy is by underpricing risk for years to come.

Here Ye, Here Ye:  Overpricing Stocks and bonds is the path to prosperity and optimal capital allocation in the economy!

Fri, 02/07/2014 - 15:36 | Link to Comment eucalyptus
eucalyptus's picture

Corzine was right. His timing was wrong.

Fri, 02/07/2014 - 15:47 | Link to Comment pragmatic hobo
pragmatic hobo's picture

which means he was wrong ...

Fri, 02/07/2014 - 15:41 | Link to Comment sudzee
sudzee's picture

Super Mario now has the tools to "do whatever it takes' thx to Germany.

Fri, 02/07/2014 - 15:50 | Link to Comment TheRideNeverEnds
TheRideNeverEnds's picture

I can't handle all this bullish news!  Jobs numbers come in way under expectations, spanish yeilds falling off a cliff, huge misses in earnings with downward guidance and warnings all around. 


Yellen will need to increase QE to at least 200 billion a month on her way to one trillion at this rate.


dow 36,000!

Fri, 02/07/2014 - 16:35 | Link to Comment TheGardener
TheGardener's picture

End of growth based thinking was never meant to be easy.

End of fiat money was hard enough, boating towards treasure
island seemed so easy.

Ancient disappeared system probably counted the shadows
of their pyramids towards growth, as software expenditure does in the US tomb proprietary GDP counting measure.

No real growth in GDP in a full hundred years in reflection of reduction of quality on all fronts : Architecture, Furniture, Textiles and anything in need of real craftsmanship.

Seriously, lost century for the objects that we try to show off with.

Fri, 02/07/2014 - 15:49 | Link to Comment syntaxterror
syntaxterror's picture

How much of this crap is going into PIMCO Total Return?

Fri, 02/07/2014 - 15:54 | Link to Comment Iam Yue2
Iam Yue2's picture

And here is the answer from Natixis;

Japan has recently expanded its holding of French and German bonds, but also shown an appetite for peripheral Euro bonds (esp. Spain).

Fri, 02/07/2014 - 16:10 | Link to Comment delivered
delivered's picture

Anything to drive the Yen lower against the USD, Euro, and just about every other currency. Let's face it, Japan is engaging in a good old fashion price war just like Wal-Mart does with other retailers (but on a country level) to drive sales. Never mind the impact on the local retail infrastructure and economy as these parties will stop at nothing to win a price war. Japan is no different as they are looking to take market share from China in the US and Germany throughout Europe, on price alone. Use to be a battle between Wal-Mart, Amazon, Costco, and Target. Now its a battle between Japan, China, & others trying to export their way out of this mess.

I give them credit for at least making the effort and implementing the most aggressive QE every tried (on a % of GDP basis) but eventually, they will fail once the Yen completely crashes. Hard to believe some of the brightest financial minds in the world simply think resorting to and using the last available credit cards will solve the world's economic problems (i.e., the credit being extended by CB's through money printing) but desperate times call for desperate measures. 

Can't help but think that continuing to buy more insurance is the only prudent strategy left as the world becomes more leveraged and awash in CB cash but there's a fierce battle with gold right now at $1,270 an ounce. I believe this is a very sensitive "short" level so it most likely will not give up this level without an intense fight. Until then, will just keep buying insurance as the world economy becomes more and more crazy on an annual, no make that quarterly, no monthly, no weekly, actually daily, and now hourly basis. 

Fri, 02/07/2014 - 16:03 | Link to Comment Arthur
Arthur's picture

Making the bonds from Puerto Rico look like a steal.

Fri, 02/07/2014 - 16:26 | Link to Comment GooseShtepping Moron
GooseShtepping Moron's picture

I'm not sure it's such a stretch of the imagination, really, to think that Spain's chances of staying solvent for the next 10 years are just slightly greater than the US' chances of staying solvent for the next 30.

Apparently, in today's topsy-turvy world a libertarian is somebody who believes that the markets never get anything right.

Fri, 02/07/2014 - 16:40 | Link to Comment hugovanderbubble
hugovanderbubble's picture

Spanish 10yrs Yield with debt haircuts will reach more than 10 % and remember Catalonia will split from Spain 

Fri, 02/07/2014 - 17:11 | Link to Comment pashley1411
pashley1411's picture

Its just numbers, "0"'s and "1"'s.

I mean, really, for people who despise the price mechanism, and love central planning, putting the fix in for a country's credit market is just knocking down another bowling pin.   What could go wrong?

Fri, 02/07/2014 - 18:36 | Link to Comment Peter Pan
Peter Pan's picture

The Fed just buys up everything"

Except gold.....

They can change the price tag but they can't change the value of all those assets they seek to manipulate one way or the other.

Fri, 02/07/2014 - 18:57 | Link to Comment falak pema
falak pema's picture

looks like Super Mario hits more home runs than Janet in this world series of who flung more dung games. 

A more plausible short term gambit could be a massive temporary move out of stocks into government bonds of EU pigsty markets; as temp safe haven from EM markets getting smoked by the Hole in the Wall gang. 

Hot money is just that : smoking hot.

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