Euro, Futures Rise Overnight Despite Greek Two Year Bonds Soaring To Record High 46.38%

Tyler Durden's picture

If we crossed through some spacetime vortex that brought us back in time just two short months ago, to July of this year, today's confirmation that the second Greek bailout has now failed, following the Finnish finance minister's comments that the country will defy Germany and will not give in to demands to abandon its deal for Greek collateral, which in turn has sent the Greek 2 year bond bidless, its yield up 227 bps to an all time record 46.38%, would have been enough to send the futures and the EURUSD plunging. Not today. Instead, the EURUSD soared to a high of 1.4475 overnight, on two things that indicate no marginal improvement in the situation, but no deterioration either, namely: that the ECB continued to buy Italian and Spanish bonds, pushing their spreads to Bunds tighter on the day, and since tighter is the opposite of wider, the market can safely stick its head under the sand. A just as big factor was that borrowing under the ECB's overnight lending facility plunged to a one week low of €42 million after hitting a recent high of €2,822 million yesterday as noted. And with the WSJ noticing this development just a little late (as last week), the contraction, nevermind that another surge in borrowing is coming shortly, has been the big risk on sign for European markets, which in turn have pushed US futures higher, even as the market is getting increasingly nervous that Bernanke could very well disappoint significantly tomorrow. As usual, keep an eye on Libor, OIS spreads, and all other liquidity metrics, which indicate that despite the contraction in the overnight borrowing with the ECB, Europe's liquidity is far from normal.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
oogs66's picture

2 year greek bonds at lowest prices ever, yet no one cares?

russki standart's picture

Just wait till the europeans return from their vacations in September,

and they start to pay attention to the financial news. I anticipate that the euro will become more volatile, with a bias to the downside. The great irony of it all is that it almost doesn't matter to the banksters, since the same group that controls the euro also controls the dollar. Like US elections, the Republicans and Democrats representing 2 branches of the same tree. For example, the great nobel peace prize winner was told by his teleprompter to break his promises to withdraw from Iraq and Afganistan, and to invade Libya. He is simply bush made up in blackface. 

ZeroPower's picture

Only CDS cares, 5yr @ 2158/2325... 48% upfront required. lol.

David99's picture

Citigroup cut its global growth forecasts for this year and next, with sharp reductions for the United States, euro zone and United Kingdom, as well as modest cuts for China and India. 

Oh regional Indian's picture

David, if the current liquidity in the White People Zone intensifies, India and it's recently inflated middle class will implode in a frightening moment. India is in a much worse position than china becasue the jobs here (back office shit) is most easily re-insourced.

india's modest cut will bleed it dry in a New Delhi minute. 


ZeroPower's picture

UBS cut global growth..

o   UBS cuts 2012 global GDP growth forecast to 3.3% from 3.8% prior

o   UBS cuts 2012 EUROZONE growth view to 1% from 2% prior


lolmao500's picture

Greece should just overthrow the scum running it and secede.

Josephine29's picture

It would appear that there is other news on Greece as I have just spotted on twitter

It looks as though Greece's banks are about to follow Irelands in tapping funds from their own central bank (h/t Dow Jones).......I guess many of you will be wondering what is the point of having the ECB when you can also do your own thing and you have a point!


So it looks like bank funding pressures in Europe are building and building...


rubearish10's picture

This thing is held together with frekin' "silly putty".

Oh regional Indian's picture

2 years, 46%..... talk about a broken system. 

But I like how germany won't allow any "new" sharks, like pesky Finland, on their Euro Turf, eh?

All your collateral are belong to us!


scratch_and_sniff's picture

yeah, schizoid markets, bonds say no QE and equities say the opposite, currencies are playing wait and see and gold had its ears clipped...clear as mud.

TradingJoe's picture

If Benjie wants/has to(by ex order) commit political suicide then he will do "something" tomorrow, otherwise he will do NOTHING! I suspect he will do NOTHING, by ex order or not! It's always better to have a "mandate" for printing, eh! So far he does not have it, he eventually will though! After Labour Day that is!

trampstamp's picture

Futures has a target in mind... who cares about greek bonds the highest ever is the way i see it... we must hit target.

Dick Darlington's picture

Continuous heavy selling from RM investors in european periphery. ECB increasing ticket size to keep 10yr yields at 5%. This is becoming a routine now and is very disturbing. Investors getting out leaving ECB to hold the toxic bag. As was the case with the smaller peripheral names, this ECB effort will end in tears.

vp499's picture

1s 5s in greece cds curve collapsing to around 14 pts from 24 pts post bailout.. bond vs cds basis implies that cds triggers

IMA5U's picture

we are in the honeymoon its so bad the governmetns will do something short squeeze in equities

PulauHantu29's picture

"Everything is fine," the newsman said last night on the TV.

I don;t know why they don;t cover the ongoijng demonstrations and riots in Paris, Greece, Israel, Italy, etc.

But as long as "everything is fine" I feel alot better.

eurusdog's picture

I had to laugh outloud when I read this. 46.3% HFS amazing that it gets so ignored.

Which is worse - bankers or terrorists's picture

Greece 2011-2=South Carolina 1860

MGHJFHD's picture

I feel like I’m constantly looking for interesting things to read about a variety of topics, but I manage to include your site among my reads every day because you have compelling entries that I look forward to. Here’s hoping there’s a lot more top-notch material coming!


Whether it is in the summer or in the summer, fashion accessories are indispensable in people’s daily life. View wholesale body jewelry|belly rings|nose rings|nose ring , we sure you will be delighted with them.

kevin22's picture

This is a great blog posting and very useful. I really appreciate the research you put into it.

<fashion trend forecast 2012

retail market analysis

Buy Franchise