EFSF Spread Breaks 190bps Record As Europe Opens Weak

Tyler Durden's picture

As traders hold their breaths for what will likely be a 'well-managed' French auction this morning, the sentiment from the late US markets is spilling into Europe as Sovereigns - especially France (record wides at 196bps), Italy, and Spain (record wides at 475bps) are all seeing yields and spreads surge. EFSF spread to Bunds just cracked 190bps for the first time as Italian 10Y spreads are back into the record-breaking zone from 11/9 and the Italian 2s10s curve is bear-flattening further by 13bps. ES managed to sustain a low volume recovery off spike lows after hours and is currently +0.5% (though leaking back) as European credit markets open leaking wider with XOver +13bps and Main +4bps. EUR remains under 1.3475 (and EUR-USD swap spread model is reverting back down towards EURUSD) as JPY strengthens modestly. Oil is diverging (higher - breaking $103!) from the rest of the commodity pack and is the main driver of a CONTEXT-based correlated-risk-basket rally (as TSYs drip back towards day low yields levels). Little sign of the ECB yet, but we suspect they are saving their fire-power for pre-auction shenanigans.

EFSF spreads broke 190bps for the first time - clearly signaling the market's perception of the AA/A as opposed to AAA/AA creditworthiness. French spreads traded wide of 196bps (record wides).

Italian spreads are breaking resistance and heading back to the lofty record wides of  last week.

But CONTEXT remains modestly biased to risk-on for now as Oil holds on to its gains and TSYs are off their low yields (though ebbing).



Charts: Bloomberg

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GerritB's picture

@ what time are the bond sales?

NewThor's picture

Is part of the yields rising due to the death of credit default swaps?

If 50% isn't a default then nothing is really, right?

The unicorn dust game of financial insurance is dead.


pauhana's picture

According to the chart Tyler put out a few days ago, the Spanish 10 yr. auction goes off at 9:30 a.m. local time and the shorter French auctions go off at 9:50 local.  Don't know if this is right as the talking head on CNBS just said we have an hour more to learn results.  Also, there is another French 10 yr. going off an hour later.

Michael's picture

If you ever wanted to see a country trying to maintain the status-quo using its monetary system to suck the life right out of the indigenous people over a twenty year period, just look at Japan. Japan was like a great monetary laboratory experiment. You can physically see what it has done to the population. They're such great fucking people the Japanese. It's a shame they allowed this to happen to themselves. The final phase of their bust is near.

The 35,000 Nikkei stock and real estate bubble was the first great bubble and bust I lived through.  It was the first great bubble bust I called too. It was epic. Tokyo land was going for 12 million dollars an acre at the time, that's like a billion dollars today or there abouts. Japan did everything wrong since then and you can see the results in their people today. It's so sad.


common_sense's picture

                                   INSERT   COIN

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Socrate's picture

Credit market bloodbath day today. Today's bond auction is an epic fail for both Spain and France. Not to tell about the FRAGER spread atm :)

Dr. Gonzo's picture

Just got the coffe going. Preparing for pre-market shenanigans.

youngman's picture

Do we need popcorn too......I am ready

Karl Tashjian's picture

Only question now is, when do equity markets wake up?



common_sense's picture


Dick Darlington's picture


lolmao500's picture


If the french bond auction fails, what about S&P giving a negative outlook on France by the end of the week? Me thinks odds are good.

Gief Gold Plox's picture

Even-though I am not familiar with the inner-workings of bond auctions, I can pretty much guaranty that (tomorrow's) today's bond auction will not be allowed to fail. Under no circumstances. There are too many people watching the show right now. Soon maybe, and definitely not as publicly [sic].

Zodiac's picture

The 21st Century Bundesbanic Plague

caerus's picture

grab your lnkd pennies folks imho (short of course)

Manipulism's picture

The Banks are looting the EFSF as you can see here:


By Agence France-Presse, Updated: 11/9/2011
Assets frozen in Greek bank embezzlement probe
The assets of more than 30 executives of small Greek Proton Bank, rescued from bankruptcy last month, will be frozen under an embezzlement probe, a justice source said on Wednesday.

The block on bank accounts, safe-deposit boxes and shares has been imposed on seven board members including 39-year-old businessman Lavrentis Lavrentiadis, one of the bank's main shareholders, and another 24 suspects who have not been identified by prosecutors.
The investigation concerns bad loans worth 700 million euros ($964 million) that were authorised in 2010 at a time when Lavrentiadis headed Proton's board of directors, the source told AFP.
Lavrentiadis, who denies wrongdoing, and the other board members will be summoned to testify on November 22. If convicted, they face at least 15 years in prison.
The probe has determined that the money was loaned "to companies where Lavrentiadis had indirect or direct influence," the semi-state Athens News Agency agency said, citing the prosecutor's report.
Other reports have said Proton funds were lent to Greek-based pharmaceutical group Alapis -- where Lavrentiadis, Alapis' founder, was until recently a main shareholder.
In October, Greece's central bank used a rescue fund to bail out Proton Bank three months after the small lender had also received emergency state backing.
The Bank of Greece said a "new Proton bank" had been established with the central lender's financial stability fund as its sole shareholder.
"A "good bank" was established, to which all deposits (by the private sector, other banks and the government), as well as the sound assets (securities and loans portfolios) of the former bank were transferred," the Bank of Greece said.
It added that the new bank was well-capitalised while the licence of the old Proton bank was put into liquidation. The authorities did not disclose the cost of Proton's rescue, but the small leftist Syriza party claimed it was over 860 million euros.
Proton Bank had also received state support in July -- one day ahead of EU-wide bank stress tests -- with the finance ministry saying the move was dictated by "state interests" owing to fears of "negative effects" on the Greek banking system.
At the time, Greek media reported that a special prosecutor was investigating a 51-million-euro withdrawal at Proton Bank which Bank of Greece sources had described as "unusual."
Proton Bank, where the 2007-10 US ambassador to Greece Daniel Speckhard was a non-executive chairman, has pledged to cooperate with the authorities. Proton Bank has a network of 30 branches in Greece and 3.8 billion euros in assets in March. Proton Bank has received over 300 million euros in state capital injections and guarantees since 2008, the finance minister said in August.


and here:



jomama's picture

i don't see why these assholes don't just break up the euro or default already.

there is no way in hell of growing out of this mess, let alone fixing it within the current paradigm.

lolmao500's picture

The reason is they want a big crisis so then they can centralize power even more.

phungus_mungus's picture

As long as they continue to pretend its all OK, it'll be OK... right? 

Ben Bermonkey's picture

Spain also in some Pain, ladies



Temporalist's picture

Thuuuuuuuhhh Pain in Spain is Mainly from Bernanke!

Bernanke mainly causes pain to Spain!



terryfuckwit's picture

apparently Merkel has asked Celente to come and explain the pitfalls of this "if you don't hold it you don't own it " theory...

Irish66's picture

spain 6.97% highest ever

Irish66's picture

Yields in a Spanish auction of 10-year bonds rose to an euro lifetime high of 6.975 percent and the country sold 3.56 billion euros ($4.8 billion).

phungus_mungus's picture


Spains auction just hit a record high and didn't make their mark, sold less debt than they wanted to..





Irish66's picture

France 5 year bond 2.82%

Dick Darlington's picture


lolmao500's picture

She says that but she's pushing for join euro bonds and ECB intervention. Basically, she's full of it.

Ronaldo's picture

Very interesting day.  I wonder how this will be spun? 

Maybe, "It is fantastic news that the Spanish yields held under 7%.  It shows the strength of the reforms and austerity measures, as well as the ardent efforts of the ECB to put a fence around the EU problems, thus preventing contagion.  We finally have a political and financial will to prevent further EU problems"

Irish66's picture

Oats 10 year about to break out over 3.8

lolmao500's picture

WTI is going up because of that :


Report: U.S. Air Force receives new 15-ton bunker buster bombs
U.S. Air Force started receiving the massive bombs in September, Bloomberg news agency reports; the bombs are capable of destroying underground targets, such as Iran's nuclear sites.

The U.S. Air Force reportedly started receiving the bombs in September. The bombs are six times bigger than the U.S. Air Force's current bunker-busters.

Also interesting :


Moody's downgrades 10 German public banks

Moody's downgraded on Wednesday its ratings of 10 German public-sector banks including BayernLB and Deutsche Hypo saying they were now less likely to receive state support if needed.

"The rating actions reflect Moody's assumption that there is now a lower likelihood that these banks would receive external support, if required," it said.


Irish66's picture

Gold Demand Up 6% in Third Quarter as Central Banks Buy

Temporalist's picture

And the news that will be spun is how India retail gold sales dropped 20%...but not mention how much they had risen.

Tense INDIAN's picture

tell me one good reason why OIL is flying away

lolmao500's picture

Got 2.

- Expectations of QE3.

- Iran-Israel-US war expectations.

Nothing else. Normally, it should be going down since the world economy is cratering.

Tense INDIAN's picture

cant e EXPECTATION of QE ...the dollar is very bullish now

ViewfromUndertheBridge's picture

Changes to the Gulf to Cushing oil flow (2 major pipelines being reversed)...think about it, if nuclear war is going to break out in ME Brent goes down but WTI goes up? What, no one but Merkans gives a fuck any more about nuclear war? I know things are bad in Euroland, but not so bad that nuclear war gets just a meh! 

lolmao500's picture

Anyone knows what was the result of French bond auctions?

Irish66's picture

The BTAN maturing Sept. 2013 had an average yield of 1.85 percent -- compared to 1.31 percent at the last auction a month ago. The note maturing July 2015 had an average yield of 2.44 percent versus 1.96 percent.


chaartist's picture

I will be scared only, if I m unable to ping ZH servers for more than one day. Europe is laughable, many think that it could be so easy to create smaller stronger and fiscaly unified EU...we could not agree on much much simpler things. Forget about it, they will print, or if they stop you ve got full breakdown to national currencies, revolutions and trade wars like hell in a matter of days.

sabra1's picture

i'm sure more printing would have inflation decrease, less debt, less revolutions! what we have now, is what the end of a ponzi scheme looks like when all control is lost! now is the time for vigilante justice by the 99%!

youngman's picture

The Frenchies are paying more too....oh oh....Bankers begging for a bailout by the ECB...how is the derivitive markets doing...no one knows...exposure.....no one knows...this is where it all gets exciting....got gold...everyone is buying it they say...but the price just keeps dropping....HMMMMMM...wonder how that can be....buy all you can...now..and yesterday

BetTheHouse's picture

And of course, US futures all green. What a fucking joke. It's opposite day again.

Tense INDIAN's picture


barkingbill's picture

futures red now baby.