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Despite 'Nouveau-Deal', European Bonds End Week Unch

Tyler Durden's picture




 

Exuberance rules and it seems everyone and their mum believes that something significant just happened in Europe in terms of a 'game-changer'. We suspect this is anchoring bias writ large - we've been down so long that any up feels great. While every asset class jumped dramatically on the day - EURUSD 4-sigma surge, stocks up 3 to 4%, Credit snapping tighter, Europe's VIX plunging, and Sovereign bond yields gapping down - the truth of the matter is that if this were truly a 'game-changer' then would it not be likely that risk assets would be higher than they were just a week ago? Between the total uncertainty of the actual plan's implementation and Merkel still pouring cold water timelines on things; we note that Spanish and Italian bond spreads end the week practically unchanged; Corporate and financial credit spreads are at 6/21 high levels (but not beyond); Europe's VIX has compressed dramatically in our favor for relative to US VIX but remains at 6/21 levels; and only stocks are above those 6/21 highs in their typical high beta excited hopeful manner. Into a thinly traded weekend ahead of July 4th, we would have expected a little more from this nouveau-deal.

Stocks look well ahead of credit's move once again. Most of credit in unch to 6/21 levels but we note that the usually high beta XOver is actually underperforming...

 

Across all European indices we rallied but only Spain and Italy managed to get solidly above the 6/21 levels...

but sovereign stress is clearly still elevated as all we did was roundtrip on the week (and Portugal is actually notably wider still)...

and finally our VIX-V2X compression trade idea has done extremely well as Europe's VIX has dropped - from over 14 vols rich to under 7 vols rich now...European VIX is though only back to 6/21 levels and so is lagging equity's exuberance also...

 

Charts: Bloomberg

 

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Fri, 06/29/2012 - 12:28 | 2573608 algol_dog
Fri, 06/29/2012 - 12:48 | 2573689 DoChenRollingBearing
DoChenRollingBearing's picture

NOTHING has changed.  Keep stacking.

Fri, 06/29/2012 - 12:59 | 2573720 barliman
barliman's picture

 

"REALITY !?!  We don't need no stinking REALITY!"

ESPECIALLY not on the last trading day for the month and quarter.

As you say, Do ...... nothing .... nada ... zip

Well ... I don't know about the rest of you ... but my contempt for the "ruling elites' has hit a another ALL TIME HIGH !

barliman

 

Fri, 06/29/2012 - 13:01 | 2573728 Silver Bug
Silver Bug's picture

Stay as far away as possible from the Bond Bubble. This is the greatest bubble in history.

 

http://ericsprott.blogspot.ca/

Fri, 06/29/2012 - 13:03 | 2573734 barliman
barliman's picture

 

FYI, Mr. Mills has stolen an analogy posted on ZH about 9 months or so ago and changed the bartender's name from Bernanke and mucked up some other aspects to increase his wordcount.

There is a LOT of plagiarizing of ideas from ZH by those who want to "appear" creative.

barliman

Fri, 06/29/2012 - 13:38 | 2573844 Mark Carney
Mark Carney's picture

not to burst your bubble but this reference is at least 2 years old, it was originally for comparison f the subprime debacle.

 

It has been changed numerous times by numerous sources.

Fri, 06/29/2012 - 12:31 | 2573620 Ratscam
Ratscam's picture

these markets are pathetic. I,ll move to Bora Bora.

Fri, 06/29/2012 - 12:34 | 2573642 magpie
magpie's picture

Isn't that still in the Eurozone ?

Fri, 06/29/2012 - 12:46 | 2573685 DoChenRollingBearing
DoChenRollingBearing's picture

France still owns Bora Bora, but they do not use the euro.  They use some local currency that France manages for them (along with Tahiti, etc.).

French Polynesia is not rich.  Looks much more like Costa Rica than France.

Fri, 06/29/2012 - 12:49 | 2573695 sabra1
sabra1's picture

i heard you can get great head there!

Fri, 06/29/2012 - 12:31 | 2573623 HaroldWang
HaroldWang's picture

And they'll all start drifting higher again as the realization that none of the "plan to make a plan" isn't implemented for months.

In the meantime, sit back and wait for a very, very ugly earnings season, as we've been told by those warnings by Ford et al. Thin trades going into a holiday week this afternoon. But the real fun starts when AAPL misses the "whisper", AMZN gets crushed by lousy retail sales and numerous others.

 

Fri, 06/29/2012 - 12:31 | 2573626 Snakeeyes
Snakeeyes's picture

Not quite. Greek 10s fell 84bps while Portugals rose 72bps. But others changed by less than 10bps.

http://confoundedinterest.wordpress.com/2012/06/29/angelas-angst-germany-surrenders-and-allows-direct-bailout-of-spanish-banks/

Fri, 06/29/2012 - 12:41 | 2573665 LouisDega
LouisDega's picture

 


nou·veau/?no?ov?/


Adjective: Modern; up to date
Fri, 06/29/2012 - 12:40 | 2573666 disabledvet
disabledvet's picture

This could be "the big one"!

Fri, 06/29/2012 - 12:55 | 2573700 slewie the pi-rat
slewie the pi-rat's picture

the godlilocksCrisisTM had been a huge successs!

predicably, once the cBankstering is correctly understood, systemic stability was not threatened at any step of the bullshit and will continue to be of top importance to all concerned,  imo

the can has been kick-0'd; greece?  TBD next week @troika...  who knows?

lizzy seems to have missed the VIX compression trade...

yup!  if yer broke, you may not have cheap credit coming no matter what that jackass hollande seems to be hallucinating about the power of bankstering if the EU can just do it right

that guy is a danger to life on earth, imo

and:  great job, germany!  angela!  i think yer ready for some fishnets, hon!

and remember if ya want greece to become the 51st or 52nd US State, just cut them off and see what happens...   L0L!!!

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