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Deutsche Bank: "This Is Yet Another Sign Showing How Broken The Financial Market Is Around The World"
Two days ago we pointed out the dramatic plunge in the 10 Year swap spread in the aftermath of last week's TLAC announcement, which just yesterday tumbled to negative record lows of -0.18% in a move that few can explain, even if many explanations have been offered. Here is DB's Jim Reid with what is perhaps the best "explanation" of what has happened.
From DB:
It's worth highlighting the stunning move of swap spreads of late and especially in the last 24 hours. 10 year US swap spreads yesterday hit a record low of nearly -18bp before closing at -12bp. The exact reason for the sharp move is unclear but blame has been placed on high corporate issuance (current and future with the WSJ discussing future high US bank TLAC issuance), balance sheet re-pricing into year-end given tighter regulatory pressure (on balance sheet USTs more expensive than swaps) and also the poor liquidity which as we know has the habit of exacerbating moves in many markets these days. You can see how savage the recent move has been with the chart below going back to 1988. This is yet another sign showing how broken the financial market is around the world. Normally you have tight swap spreads when Governments are issuing like crazy (not the case in the US) or if bank credit quality was perceived to be very strong (not really where we are today). Before September we'd only ever seen negative 10y swap spreads for a period in 2010 although they did turn negative intra-day 3-years ago. It’s not quite up there with the flash rally/crash in Treasuries 13 months ago but it’s a very strange occurrence and one to watch and likely another product of regulation and liquidity.
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Hey you bastard.....you sunk my battleship!
No you sob, you sunk your own battleship. /sarc
We had a perfectly good plan.....right before it turned into crap.
You are welcome...
DB's Jim Reid writes from his London office: "Normally you have tight swap spreads when Governments are issuing like crazy (not the case in the US) or if... "
Jim, that's only the supply side, isn't it? and there are lots of USTs sloshing around in the world. I don't even want to go into questioning your "tight swap spread" theory, but if you argue about a market only from the supply side then in my view you are beating around the bush. in other words, "another product of regulation and liquidity" is, imho, not enough
The U.S. annual budget deficit is still half a trillion dollars EVERY year. Sure, that may be down a bit - but 10 years ago that would be considered to be a government issuing debt like crazy! My have times changed!
This is bullshit. Everyone knows the biggest issue of the day is whether or not the Egyptianss stored grain in the pyramids 3,000 years ago. Got it?
Had that been the case....I would have thought they would have built silos rather than pyramids.
they did. Pharao got a dream, and an adviser explained to him what it meant. first recorded application of "state capitalism"
Did I need to clarify... /sarcoff?
So did they or didn't they store grain?
http://zhc0.com
yes, they did. no, it wasn't in the pyramids
Some of the oldest known written inscriptions were recovered from ancient Egypt. They detailed the daily ration of beer allowed to each citizen.
No joke.
big biz, beer in early times. the whole Mesopotamian economy was based on beer. way older clay tablets doing the same kind of accounting there
Your use of the Zero Hedge name on your own brand of Shitcoin crypto currency is disinjenuous, and is also copyright infringement.
Change your name to 15donkies1horse. Because you are one stubborn ass, pimping your crap everywhere on this site.
I pray your lawyer bankrupts you defending against copyright infringement with the good name of Zero Hedge.
And like all government projects it took decades, had huge cost overruns and when it was done they realised they forgot to even put a door on the thing.
while giving the three most important economic answers to poitics. jobs, jobs and jobs
building pyramids or digging holes to fill them again is bad, and yet still better then... war
the other kind of government project
Terry Pratchetts' 'Pyramids' explains it all.
For those that are non readers, I got nuffin.
Maybe the obelisks are really hollow...
https://en.wikipedia.org/wiki/Cleopatra%27s_Needle
Some scribe noticed the unemployment numbers and came up with a plan to put them to work. It's as simple as that.
Now he is sub,sub Pharaoh administrating Nile Flood damage.