European Investors Rush To Safe-Havens - Italy/Spain Bond Yields At New Record Low

Tyler Durden's picture


"While the music is playing, you keep dancing," seems the only possible explanation for the fanatical demand for peripheral European bonds as everyone and their pet rabbit front-runs the ECB (or merely rushes to the 'yieldiest' thing given Draghi's implicit guarantee). At 3.1%, it beggars belief how 'risk' is mispriced in these sovereigns should any capital regulations ever mark sovereign debt as anything but riskless.



Remember what happened the last time Draghi did any bond-buying (the SMP) - we saw bonds sell off into the actual actions of the central bank... so it seems the market continues to trade on the promise (and yet hope it never comes true)...


Well that plan didn't work so well eh? It would appear that during the 2010 period spreads doubled from 100bps to 200bps and once again during the 2011 period, spreads almost doubled from 260bps to over 500bps in Spain.


Charts: Bloomberg

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Wed, 04/16/2014 - 11:45 | 4665271 Haus-Targaryen
Haus-Targaryen's picture

Good God almighty, if these countries are safe havens, then the financial world really is coming to an end.

Mario Draghi:  We believe the current yields in Spain and Italy accurately reflect market conditions.  (Tranlation -- I have no idea what I am doing)

Wed, 04/16/2014 - 11:47 | 4665282 disabledvet
disabledvet's picture

"Putin invades." Move along.

Wed, 04/16/2014 - 11:48 | 4665292 kliguy38
kliguy38's picture

How can one NOT want to just buy tons of this shit.........watta DEAL!!

Wed, 04/16/2014 - 12:13 | 4665397 max2205
max2205's picture

Spy 2% from new all time highs......

Wed, 04/16/2014 - 11:48 | 4665291 SpanishGoop
SpanishGoop's picture

What is that "market" Draghi speaks of ?


Wed, 04/16/2014 - 12:06 | 4665371 Ghordius
Ghordius's picture

it's the thing he put his gun into it's face and said: "Make my day...". good old continental european national bank tradition of being the sadistic mistress of "Ze Markets"

of course, it's utterly against any British or American tradition of leaving the punks first get into trouble and then "do something to ease the pain"

Wed, 04/16/2014 - 12:03 | 4665355 Ghordius
Ghordius's picture

ok, so let's start with facts: they are G20 countries, industrialized, big productive and exporting economies that have given up the age-old "sovereign right" to devalue whenever it's convenient, are probably at the bottom of a hellish downturn, have shrinked their deficits like nobody before...

...and they now look much, much better than many others who have not go through all this. then at the end, a safe haven is a relative thing

meanwhile, repatriation of sovereign bonds is continuing. many Spaniards, Italians, Frenchmen, etc. realize that if they have to suffer, at least they can profit from it

btw, it's ridiculous how many "I buy gold!" signs you see in all those countries

Wed, 04/16/2014 - 12:23 | 4665428 Latitude25
Latitude25's picture

So is that a buy signal from you on Spanish and Italian bonds?

Wed, 04/16/2014 - 13:36 | 4665816 Haus-Targaryen
Haus-Targaryen's picture

Shrank deficits huh?

Hi, my name is Spain and Italy. Have we met?

Thu, 04/17/2014 - 02:06 | 4668448 TeraByte
TeraByte's picture

"Mario Draghi:  We believe the current yields in Spain and Italy accurately reflect market conditions." For once I can agree with this chap. The market conditions are a perfect reflection of the ultimate insanity. 

Wed, 04/16/2014 - 11:47 | 4665276 markelshark
markelshark's picture

I enjoy ZeroHedges anti-establishment, Austrian banking views as much as anyone, but, seriously, they've been calling a top since 2009 (or whenever the site started). It is no wonder it is referred to as "Zero Edge" by traders.

Wed, 04/16/2014 - 11:50 | 4665303 kliguy38
kliguy38's picture

I certainly hope you're long and strong......but then of course you're just a shill livin' in mommy's trailer gettin paid a nickel/reply.......hehehehehe.....

Wed, 04/16/2014 - 11:50 | 4665307 LawsofPhysics
LawsofPhysics's picture

I guess it all depends on how one defines "wealth".  Mine has grown substantially, with many hat tips to ZH on spreads etc. that I missed...

Wed, 04/16/2014 - 11:51 | 4665309 H. Perowne
H. Perowne's picture

Yes, traders who clearly enjoy getting Gartmaned/Stolpered like clockwork.

Wed, 04/16/2014 - 11:59 | 4665348 Slave
Slave's picture

Where did they call the top? I don't see it...

I remember them saying "nobody rings a bell when you're at the top" which is kind of the opposite of your comment...

All I've seen is them constantly point out how fucked the establishment is...and overvalued the market you disagree?

Please cite specific examples next time and you might have people listen to you.

Wed, 04/16/2014 - 12:12 | 4665363 Dr. Engali
Dr. Engali's picture

One would think that a person of your tenure would be able to cite examples of when Zero Hedge made an attempt to call the top. What's that you can't? That's because they haven't They only point out the ridiculousness of it all. The few trade recommendations that they did make, if you were smart enough to execute them (which I doubt you are), would have paid off handsomely. For a troll, you're pretty pathetic.

Wed, 04/16/2014 - 11:47 | 4665280 SpanishGoop
SpanishGoop's picture

Safe-Havens ?

Compered to what ?

A yes of course PM's.



Wed, 04/16/2014 - 11:48 | 4665293 Spawn of Cagliostro
Spawn of Cagliostro's picture

Los céntimos en frente del Bulldozer! Oléééééé!!!

Wed, 04/16/2014 - 11:49 | 4665294 LawsofPhysics
LawsofPhysics's picture

Let the "bail-ins" begin!

Wed, 04/16/2014 - 11:49 | 4665295 medium giraffe
medium giraffe's picture

All the shirts are dirty.  As dirty as each other.  They stink of shit and urine.  Why swap one for another?

Wed, 04/16/2014 - 11:49 | 4665296 no more banksters
no more banksters's picture

"In order Greece to attract investors like Goldman Sachs, as the Greek government wanted and to build a picture of a "normal" bond auction, has designed the latest bond issuance under unprecedented legal and financial terms for a European and developed nation. This was designed by the government under top secrecy."

Wed, 04/16/2014 - 11:55 | 4665332 SpanishGoop
SpanishGoop's picture

So if they can not make their first interest payment Greece is to be sold off.

More pressure for more bail-outs.



Wed, 04/16/2014 - 12:07 | 4665376 Ghordius
Ghordius's picture

Greece is now back in the markets. just saying

Wed, 04/16/2014 - 11:49 | 4665302 Caracalla
Caracalla's picture

I'm tellin ya, this mother is going up between now and the end of April.  BTFD!  And everything will be going up, stocks, oil, commodities, Greek, Italian and Spanish bonds...everything.  Just buy and make money for the next two weeks.  This is all you need to know.  BTFD

Wed, 04/16/2014 - 11:58 | 4665343 PlusTic
PlusTic's picture

This would be hilarious if these fukkers weren't serious...they actually believe this crap is a good bet...

Wed, 04/16/2014 - 11:59 | 4665347 Yen Cross
Yen Cross's picture

     What's so blatantly obvious is how the system is being gamed. Whether it be the rediculous levels equity markets are at or the rediculous levels interest rates and the various levels sovereign bond markets are at. This is all just one big game of front running the hypothetical/jaw boning of central banks that are basically backed into a corner with respect to further easing.

   Global devaluation is reaching a level that's starting to cause civil unrest and instability. This type of instability isn't conducive to positive economic growth. (revolts, government instability and general strikes)The effects of easing have diminished and are now causing more harm then good to quality of life and opportunity for most folks. The fact that banksters think that adding more money will fix anything is astounding, when one reflects back on the last (6) years of this debacle.

Wed, 04/16/2014 - 12:00 | 4665353 hotrod
hotrod's picture

How come all the small countries in South America get hammered with high yields when they try to sell their debt?  Even "robust" Puerto Rico's bonds get hammered.  I realize that I could never compare Spain and Italy to this bunch of misfit countries. Privileges of Euro membership I guess.  Ukraine better join Euro too cause insolvent nations can get money real cheap in that club via the Fed.

Wed, 04/16/2014 - 12:07 | 4665375 hotrod
hotrod's picture

Darn, Draghi does not need to ease, all the bonds are bought at low yields anyway.  My god it is magic or something.


Wed, 04/16/2014 - 12:10 | 4665382 syntaxterror
syntaxterror's picture

I just scored some Greek bonds at 3.0%. I did a celebration dance like Jesus Quintana in Big Lebowkski when the order went through... Nobody fucks with the Jesus!

Wed, 04/16/2014 - 12:20 | 4665409 A_Nejad
A_Nejad's picture

Listen, those traders I know of are running around like a headless chicken here in Europe cause they just want to hedge before this coming Easter holiday.  There are words at the lunch Pubs in the City is that "things" in ukraine can get messy/hot over these holidays, so they just don't want to come back (for some) on Tuesday with their pants down...And believe me, you don't want to see those bastards with their pants down!

Wed, 04/16/2014 - 12:30 | 4665458 Son of Loki
Son of Loki's picture

They'll all be bailed out so why not buy them?

Wed, 04/16/2014 - 12:42 | 4665533 asscannon101
asscannon101's picture

Its the old central banker's 'Dutch Rudder' routine: Brussels buys our shitty debt and we buy theirs...

Wed, 04/16/2014 - 13:03 | 4665626 Yancey Ward
Yancey Ward's picture

Hey, Germany's credit is good afterall.

Wed, 04/16/2014 - 13:47 | 4665885 Peter K
Peter K's picture

Paying anything less for Spain or Italy than you would pay for Bunds is FREE MONEY.

Drahgi will buy cause it's On Merkel's Tab. ;)


Wed, 04/16/2014 - 13:53 | 4665920 Ifigenia
Ifigenia's picture

as long as Goldman Sach Mario Draghi has his hands tied from QE, euro-bonds are save haven

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