Is The ECB BTP Buying Spree Back?

Tyler Durden's picture

Having been on a two-week vacation from their Europe-wide buying spree of everything that is red for the day, it would appear that the ECB is back. As Italian bonds started to accelerate to the downside today, and the 10Y bond touched EUR99, suddenly the yield-rising trend reversed and nine (count them nine) gappy surges later, BTPs are in the green with their yields heading back towards the safety of 5% very rapidly. Perhaps reflecting on the points we have raised before on the CDS markets being a cleaner 'market-reflective' indication of risk is increasingly important as we note...drum roll please...10Y Italy CDS are +21bps at 382bps, near the wides of the day as 10Y bond spreads are now tighter by 2bps and 20bps off their worst levels of the day!



The 5Y CDS-Cash basis has risen 10bps today from its lows this morning and perhaps that helkps explain some of the move but as we have pointed out before this is 'hedged' risk taking and not reflective of real-money risk appetite - keep watching CDS!

Chart: Bloomberg

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LongSoupLine's picture



Half-life of ECB buying in 3...2...1...

Short Memories's picture

"All your debt is belong to us!"


Jason T's picture

What's the point?  Reminds me of the woody allen movie, Annie Hall when he goes back to his childhood and thinks the universe will break apart.


Peter K's picture

At the end of the day, the EUROSIS will end when the ECB has ALL the Eurotrash debt:)

Can we say Soviet Union:)))))

john39's picture

why would anyone other than a central bank buy this sovereign debt?

nope-1004's picture

Exactly.  You isolated exactly who is doing all the buying.  If they don't, hyper event up next.

This farce of a bad comedy is all too hilarious to watch in real time.  I get enjoyment from it, but the CB's manipulating this pig must be exhausted at the end of each day trying to keep the boat made of mesh afloat.


monopoly's picture

When does the sale start? Never buy anything anymore unless it has a 30% off sale.

monopoly's picture

And TVIX, how is this allowed to happen in regulated markets. So glad I got out yesterday with only a 28% loss.

ZeroPower's picture

Repeat after me: TVIX is designed to go to zero.

If it wasn't in CSs own prospectus, i wouldn't even bother posting this. My boss laughed when we received a special invite for a cc hosted by CS to explain the advantage of holding a vol based ETN. If smart (?) institutions don't even bother with xyz levered products (market making excluded), why the fuck would it be fit for retail? Retail gets hosed, thats why.

Village Smithy's picture

The CB's are getting bold beyond reason.They have pumped a shit load into the markets to hold these sovereigns up and they think it is working. Low velocity is is eating the effect of the mind boggling level of injections and keeping inflation just bareable. How can you justify "playing" with the economy in totally untested levels of monetary stimulus. This is a Frankenstein economy and they have no idea what's going to happen when it gets up off the table and starts walking.

adr's picture

This is like a whole bunch of kids playing with remote controlled cars. All of a sudden one car just starts driving all by itself. All the kids look at each other and none of them are touching a controller. They all start blaming each other saying, "Cut it out man, you're freaking me out". Then they throw the controllers down and say, I'm out.

flyingpigg's picture

I guess the only other buyers were already fully saturated after patriottic Italian households bought for over 7 billion euro into the last auction of 4-year inflation protected ponzi bonds this week. It reminded me of the recent story covered by ZH recently on a Greek businessman who bought into Greek sovereign debt few years ago only to notice this year 80 % of his investment vaporized.

ekm's picture

Since no private investor with a maximum of 2 grams of brain will buy any kind of euro sovereign bonds, ECB will be the only buyer until something breaks:

- Food riots

- Gas riots

Take a pick.

I am giving you my life experience from communism in eastern europe for free.

Dick Darlington's picture

Broken "market" chronicles continue... Let's all shout it together: Zee price stabeeleeteeeeeeeee!!!

ekm's picture

Exchanging paper money or electronic money for another paper money or electronic money does not make for any trading of real goods.

Riots are coming. Riots happened in Greece, now it's Spain, Portugal, Italy.

Saw some glimpses of them in England and France last year. Very soon, very soon. No gas and no food for youngsters...................................................................

CrashisOptimistic's picture

Guys, think.

These are politicians.  They don't know anything at all beyond smiling and being charming.  They are told by their advisors that these things must happen or the ATM machines will stop and people will become angry and gasp, vote for the other guy.

So they give them the go ahead to do what they must.  The ECB knows that their own careers and pensions depend on "holding it all together".  They have no reason NOT to take these actions.  Why would you be surprised when they do?

ekm's picture

Very, very correct.


andyupnorth's picture


Now THAT's a V-shaped recovery!  [/sarc]

lemarche's picture

please don t tell me that no one, no insders are FRONT RUNNING the market when the BCE starts to lift all offers in BTPs................

chump666's picture

An Italian madman who is now out of control.  Europe is going to burn in summer