Italian Bond Yields Tumble To Record Low As Spain Drops Below Treasuries

Tyler Durden's picture

Presented with little comment aside to ask, WTF?




It seems there is a lesson here for all... push your unemployment rate to record highs, loan delinquencies to record highs, and depress your people to record high suicide rates... and voila... low cost of funding is guaranteed (surely there is a recipe here for Ukraine or Turkey or...)

Oh, and you absolutely must have a central banker with a 'promise pony'.

As we anxiously await the outcome of AQR (Europe's Stress Test) we can only imagine the bloated balance sheets of European banks stuffed with the domestic bonds that the crisis has now created and made the entire banking-system-sovereign-stress relationship inseparable.

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Sudden Debt's picture

Okay, the boat is burning but the captain said it's okay to take it out for a cruise!

wallstreetaposteriori's picture

Looks to me like every fucking financial institution in the world is trying the front run the ECB on their "non QE"-QE.  What in the world is going to happen to the value of their "tier 1" capital when everyone figures out that these countries are all broke with no tax revenues, because more than half their population isn't working.....  


I've been in the thick of these countries researching the crisis and I can honestly tell you things are not as "rosey" as everyone wants you to believe.  

Fortunate Fool's picture

Tyler, where is the collapse of the Euro you have been promising for so long? lol...

Zerozen's picture

Could be next year, could be 10 years from now

ilion's picture

I think it was Draghi who said yesterday that euro area inflation is at 4 year low. Currently it is a pure deflation play in bonds and usually bond market doesn't lie like CEO of BATS does.

The CEO of Armada Markets ( ) said that the Spanish/Italian yields are slumping lately because Russians (possible also Chinese) are dumping US treasuries and puting this money into European bonds (including perifery bonds). This means that short-term, EUR should find some support against USD despite the recent bad economic news from both sides of the Atlantic.

At the same time Saxo Bank (www.saxobank.comCEO said last week that Euro should fall against USD.

It seems that Russians (Putin) are behind anything that happens currently in the world.

ArkansasAngie's picture

Isn't it obvious that Spain is in better shape than the Fed. /sarc

Gotta get the dumb bunnies to put their hard earned savings at risk before you can take it from them


Spitzer's picture

They do have a trade surplus

all-priced-in's picture

"Okay, the boat is burning but the captain said it's okay to take it out for a cruise!"




But everyone knows Tennille makes all the important decisions.


whatsinaname's picture

Have Italy, Spain, Portugal, Greece, Ireland, France all been rated A+ by the S&P based on the performance of their bond markets ?

knukles's picture

That, gentlemen is a paired trade if I ever saw one.  Long UST, short Spain

Boston's picture

Stated another way---if Spain's 5yr can be 'managed' down to yield 1.7%, then if necessary (and it will become necessary) the US 5yr can be 'pushed' down to ~0.17%.

fonzannoon's picture

"It seems there is a lesson here for all"

yes there is. The market is rigged, and on a scale so unbelievably massive hft is just a fart in the wind.

DeadFred's picture

But in order to do your paired trade you would have to go long treasuries... I'll pass.

whatsinaname's picture

The safer bet is long SPY and short nothing. Now thats a pair trade that will certainly work.

LawsofPhysics's picture

The problem I have with the case for the Euro and the E.Z. ECB etc. is the same with all central banks.  Show me the collateral motherfuckers.

ArkansasAngie's picture

They don't gotta and they ain't gonna.

I will vote against every incumbent no matter the party.

I suggest you do the same.

LawsofPhysics's picture

Does John Corzine still have access to a trading terminal and funds?  What the fuck?  Yeah, sign me up for those PIIGs bonds.......NOT.

firstdivision's picture

Sell PIGGS now!  Even Corzine could make money on this.

Sudden Debt's picture

PIGGS are worth more during the summer when BBQ season starts!!!


ArgentoFisico's picture

86 billion euro/year in interests alone on our debt ...

MFLTucson's picture

2 bankrupt countries fighting for the bottom to float more fake money!

fattail's picture

So.......  Corzine was right????   Just front run the euro deflation 2 years to far in advance.

DeadFred's picture

Early is the same as wrong.

NDXTrader's picture

All of Abe's Yen have to go somewhere. I think there was a backroom deal where Europe and the US agreed to let the Euro strengthen and not complain about the Yen's fall if Japan agreed to buy Euro sovereign debt and S&P e-minis. My guess is that if you looked at the BOJ's books you would find a lot of European peripheral bonds

ThroxxOfVron's picture

Do Euro bonds count as tier 1 on the books of Foreign Banks dong business in the US? That $242B in FED window dressing might have been Re-Repoed for Euro bonds.

pagan's picture

I read somewhere it is the Chinese buying up the Euro bonds.

ForWhomTheTollBuilds's picture

Seems like this and "the world is in a deflationary depression" are the only two explanations that make any sense.

In Canada the mortgage interest rates for popular terms are right back where they were last year around this time.  After last summers rapid rise in 10 year treasury yields, we were told you would NEVER EVER see 2.9% five year fixed mortgage rates again.  


And yet here we are.

venturen's picture

Happy days are here again. housing is above bubbles, the worst are first, I am going to vote for the new Obama world order! And best of all deficits don't matter and you can print unlimited money and we are all going to be rich!

Bunga Bunga's picture

Get over it, it's a "free" market.

Iam_Silverman's picture

I would like to see the cost of a CDS wrapper overlaid on the bond price.