BTPs Yielding 1% More In Two Days Since LCH Margin Cut

Tyler Durden's picture

In what will likely be the fastest margin cut-to-hike about face, we note that since CC&G (and then subsequently LCH) cut margin rates on Italian debt last week, 10Y BTPs are now trading over 100bps higher in yield and 110bps wider in spread (and CDS +120bps). Both long-and short-term, it seems a margin hike is just around the corner, as we warned last week on the CC&G announcement, and with the ECB now a little less aggressively rerisking their already debt-laden balance sheet, it seems once again managers used the SMP-indiced better prices to cover stuck longs.



Short-term, it seems the margin cut was horribly mis-timed...


...and long-term there is no justification for what was clearly a suspiciously-timed decision as BTPs head back towards 7% yield.

Charts: Bloomberg

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fonzanoon's picture

This hike flies in the face of the Santa rally. It will not happen. You don't mess with the Santa rally. There may be a credit upgrade but not a margin hike. Maybe after the new years rally and before the Groundhog day rally they could find time to raise margins but it's doubtful.

LawsofPhysics's picture

Don't sweat it.  In this case the more frequent the margin hikes, the less effective they will become.

SheepDog-One's picture

'The Santa rally'...looks like theyre still struggling to start the engine on that hoopdie.

slaughterer's picture

"Santa rally" has been renamed "Santa Crash" this year.  Since markets did not respect Thanksgiving, Christmas will be a disaster.

WhiteNight123129's picture

Santa is coming with a club so far today, with an OWS T-shirt.

YBNguy's picture

Swedbank bank RUN in progress!

slaughterer's picture

Where do we go from here, Italy?

Irish66's picture

run don't walk to the atm

machineh's picture

Maybe the ECB has started lending to CC&G and LCH.

If ECB can't fix those pesky rising yields itself, then pay some middlemen to do it.

johngoes's picture


"The NYSE is not accepting new orders in about 100 stocks due to “matching engine issues,” Dow Jones Newswires reports.

The issue affects BofA, IBM, Visa and more."


Can't wait to see Tyler's take on this. Is this the sound of breaking glass?


bnbdnb's picture

That explains the freefall... No PPT power.

EverythingEviL's picture

What are matching engine issues?

johngoes's picture

It's another language, sort of like "managerese" - ya know, when upper level managers speak for 30 minutes and really say nothing. It's related to adult speak on charlie brown cartoons - "whah whah, wa wa, whah whah whah".

Georgesblog's picture

Since the the system depends on the promises of politicians, bureaucrats and bankers, don't expect too much. The withdrawal symptoms of debt dependency will be greater than the printing presses can cope with. Which will come first, default or double - digit bond yields? "It can't happen heeere..." Never say never.

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