Europe Closes At Day's Lows As Sovereign Curves Invert

Tyler Durden's picture

European equities marginally outperformed credit markets on the day but both ended dreadfully as markets went bidless into the close. Ending the day the lows, having retraced over 75% of the 9/23 to 10/28 swing rally, equity and credit markets are well into bear market territory as sovereign risk morphs back into financials and on into corporates. Sovereign spreads may look 'optically' marginally improved if one focuses merely on the 10Y levels, but a little more digging shows that almost without exception sovereign spread curves all bear flattened considerably today with the short-dated risk rising dramatically relative to mid maturities as jump risks become more and more of a concern.

Equity (now 25.5% off its Feb11 highs) started to catch up to credit into the close but closing at the lows into a low liquidity low volume long weekend suggests more than a little risk aversion. Equity, Credit, and FX markets are more in sync in Europe than in the US (where stocks remain a little exuberant still) and are back to 10/05-06 levels.

And if one looks down the 10Y column - you could be mistaken for thinking it was a good day for sovereign credit (aside from Belgium and Greece - and Austria off the chart). But it was the massive underperformance at the front-end that is most worrisome as inversions are more and more likely and bear flatteners appear the trade du jour. We suspect this is as much about the unwind of the crowded short-dated higher-yield trade than an actual spec flattener trade.

Charts: Bloomberg

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Mr Lennon Hendrix's picture

Call Oliver, he knows what to do!

Based on my math, we need to, [cough] print, and based off my math, it needs to be fractionaly reserved, so [cough] that means if Europe needs $3 trillion then we need to print $30 trillion.  I spent all week on my math by the way, so give me some credit.

The Big Ching-aso's picture



Not a recession.     Shrinkage.

SRVDisciple's picture

I was in the pool!!!

(Sorry. Had to do it. Couldn't help myself)

Cognitive Dissonance's picture

How many recessions does it take to make a depression?

Caviar Emptor's picture

It's just a garden variety recession! Really!! PLease say it is, please!!!

TeamDepends's picture

Print print print   print print print

Printing all the way

Oh what fun it is to print

Like Weimar, Zimbabwe Oh!

TeamDepends's picture

Dashing through the snow

'Cause you ain't got no home

2nd verse:  The Banksters all on blow

3rd:  The Banksters and their ho's

Snakeeyes's picture


Belgium Dexia Debt Woes, Germany’s Debt Issuance Debacle – Obama Spares Two Turkeys (NOT Belgium and Germany)


Jonas Parker's picture

He spared Biden and Pelosi???

Tsar Pointless's picture

C'mon, don't be so damn partisan.

It was, in fact, Boehner and Reid he spared.

You're welcome.

john39's picture

there is more than one Party?

Tsar Pointless's picture

Now that Europe is closed, that frees up the algos to focus on just the US equity markets.

Afternoon meltup, on the way!

PicassoInActions's picture

can we have something positive, by mistake i picked up eur/chf at 1.2301 and losing big.

As soon as i recover you can have your negative market back.

Please some1 call Benya da Men and ask him to do something.

The Big Ching-aso's picture



I think the rumor mill is grinding to a halt.    

PicassoInActions's picture

that's sux

i need only 30 pips to be on the green and then i am out for vacation.

Can we start some kind of rumor that SNB is about to intervene at 1.2.3.....



earleflorida's picture

no it's not - just temporarily in neutral,... being put in reverse for christmas rally

no really?

slaughterer's picture

I would expect an EOD short-covering rally on the NYSE as tomorrow is a meeting between Sarkozy, Merkel, and Draghi, where Draghi was asked by Merkel to bring along "new ideas."

Cone of Uncertainty's picture

A turkey for me and a turkey for you.

Let's eat turkey in a big brown shoe.

junkyardjack's picture

Cool, time for the US ramp up...

slewie the pi-rat's picture

bear flatteners?

right along the wall, there, with the screws, hooks, and hangers, sir!

next to the beer goggles. just left of them...

Captain Kink's picture

"bear flattener" alsways makes me think of those bear-hide rugs, head still attached, mouth agape... wondering what the hell happened.

slewie the pi-rat's picture

since it's a bear, it probably wasn't trying for a nickel in front of a...

...oh! the animal spirituality of it!


Mr Lennon Hendrix's picture

While Obama makes a mockery of our political system and "bypasses Congress to pardon a turkey".  He is the fucking joker!

Dr. Engali's picture

It's going to be interesting to see what happens in the European markets on a day when the U.S. markets are closed.

El Oregonian's picture

Germany told the other EU members "It's time for Tanksgiving. If you all don't start paying up we're going to send our Tanks.

Cone of Uncertainty's picture

Someone please pass the gravy.

pmcgoohan's picture

Dont we even need a rumour anymore?

Texas Fold-em's picture

The only prescription is...MORE COWBELL!