European Bloodbath Continues As Spanish 2Y Is Crushed To Record High Spreads

Tyler Durden's picture


While Monti claims there is no need for an emergency summit and Spain and Italy ban short-sellers (but not long-sellers yet), Europe's Dow-equivalent is down around 2.5%. Interestingly Italy and Spain 'bounced' off ugly lows intraday (which we are sure Monti/Rajoy are patting themselves on the back briefly) but France's CAC40 and Germany's DAX were sold hard - both down around 3% (as proxies as much as contagion-gatherers). More critically, equities are catching down to European credit markets. European financial credit is now notably wider than pre-Summit levels but it is the front-end of the Spanish and Italian sovereign yield curves that has been absolutely monkey-hammered in the last few days. Spain 2Y is now at 16 year highs in yield (biggest 1- and 2-day jumps in over two years) but all-time record wides in spread as we await for the ultimate death cross of inversion to signal the approaching endgame. EURUSD hovered around 1.2100 (down around 50 pips from Friday) and while oil prices slumped, Brent priced in EUR remains above its levels 2 months ago. Meanwhile, Swiss 2Y rates are at a new record low of -44.4bps, German 2Y same at -8bp, and Denmark remains -31bps - though we do note some of the other higher quality 2Ys leaking a little higher in yield such as Austria and France.

European stocks (blue) are catching down to European credit and financials are now worse than pre-summit as the reality of bail-ins and/or subordination hit home...

and Italian and Spanish financial credits have been just smashed wider...

but it is the Spanish yield curve and its too big to save nature that is crushing hopes...

and 2Y Spanish spreads are now at all-time record wides...

and EURUSD weakness combined with oil strength has crushed the hopes of any savings on energy as Brent priced in EUR remains extremely high...

and there is some differentiation occurring at the short-end of the high quality collateral spectrum...

Charts: Bloomberg

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Mon, 07/23/2012 - 11:57 | 2642832 Gene Parmesan
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Nothing a good old fashioned summit can't fix!

Mon, 07/23/2012 - 12:00 | 2642838 Precious
Precious's picture

Bernanke told Geithner to get on it.

Mon, 07/23/2012 - 12:13 | 2642886 spastic_colon
spastic_colon's picture

Bad time to be a monkey nail

Mon, 07/23/2012 - 12:16 | 2642904 daveeemc2
daveeemc2's picture

Looks like I picked the wrong week to quit drinking.

Mon, 07/23/2012 - 12:23 | 2642929 Precious
Precious's picture

The new UP is DOWN.

Mon, 07/23/2012 - 12:27 | 2642936 fonzannoon
fonzannoon's picture

Wake me up when the UUP is down

Mon, 07/23/2012 - 12:16 | 2642905 daveeemc2
daveeemc2's picture

Looks like I picked the wrong week to quit drinking.

Mon, 07/23/2012 - 12:26 | 2642934 Precious
Precious's picture

... and now you're addicted to the internet.

Mon, 07/23/2012 - 12:44 | 2643005 jez
jez's picture

Sorry to say, it appears you already have severe memory loss.

Mon, 07/23/2012 - 13:02 | 2643090 gatorengineer
gatorengineer's picture

Are we there yet?  Meltdown to endgame?


Also whats a Monkey Nail...?

Mon, 07/23/2012 - 12:48 | 2643030 JenkinsLane
JenkinsLane's picture

I think you should apply for that vacant position at the IMF.

Mon, 07/23/2012 - 11:58 | 2642834 Jayda1850
Jayda1850's picture

so what you're saying is Europe is fixed right?

Mon, 07/23/2012 - 12:01 | 2642842 fireangelmaverick
fireangelmaverick's picture

I think he means "Neutered".


Mon, 07/23/2012 - 12:06 | 2642861 NewThor
NewThor's picture

So this is the reason for the 100 point jump up in the Dow Jones from its -230 point low?

Mon, 07/23/2012 - 12:13 | 2642889 Jayda1850
Jayda1850's picture

No amount of alcohol and weed can explain these BS market moves, trust me I've tried. Don't know what is gonna be more entertaining this August and September, the collapse of the Euro or the trial of this red dyed hair patsy in Denver. I just hope one of them brings on the much needed collapse that  i sadly wish for on a daily basis.

Mon, 07/23/2012 - 13:57 | 2643235 turtle777
turtle777's picture

You mean "new turd", right ?

Mon, 07/23/2012 - 12:00 | 2642839 slackrabbit
slackrabbit's picture

Krugman - bullish

Mon, 07/23/2012 - 12:49 | 2643024 knukles
knukles's picture

Then it's decided.
All's well in Neo-Keynesian Hell.
Geithner says he's the most fucking transparent SecTreas ever... guess when there's not much to show, transparency is easy.
Bernak is a Neo-Keynesian with a printing machine.
The CONgressCritters are all over the fiscal delima like stink on shit, so to speak.
The Authorimainsitrative Branch has lazer focused upon  ummm uh  lemme see here.
The UN is pushing for a New World Order.
The EU's shit's all fuzzy.
Spain, Italy, Greece, Cypress, let alone Ireland, France and Italy don't need bailouts and will have their states finance the country's budget deficits while the country finances the states.
Olympics are an organizational triumph of British Bureaucracy and Political Correctness.
China's data/stats are not for real.  Because with all them fucking people, nobody has a clue what goes on.
Asia is in great shape as long as China, Europe and the US are in great shape.
The US has finally made it past the green shoot stage.  (cough)

What could go wrong?

Mon, 07/23/2012 - 12:01 | 2642843 El Oregonian
El Oregonian's picture

No es bueno.

Mon, 07/23/2012 - 12:01 | 2642848 mrktwtch2
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we should be lower than this..dow shuold be at -350..but as usuall it isnt

Mon, 07/23/2012 - 12:08 | 2642866 Doubleguns
Doubleguns's picture

Patience Grasshopper. Out time WILL come. You can be sure of it. Nearly identical charts too!!!

Mon, 07/23/2012 - 12:03 | 2642851 Too Big 2
Too Big 2's picture

Perhaps it's almost time to break out the know...the one that worked so well last time. 

Mon, 07/23/2012 - 12:19 | 2642916 MsCreant
MsCreant's picture

Thought you meant the gum so that they could blow more bubbles (or just blow).

Mon, 07/23/2012 - 12:50 | 2643042 knukles
knukles's picture

Did somebody say coke and hooker time?

Mon, 07/23/2012 - 15:01 | 2643428 unrulian
unrulian's picture

so.... by that, you're implying that there's a time that isn't coke and hooker time???

Mon, 07/23/2012 - 12:03 | 2642853 falak pema
falak pema's picture

Euro is the bridesmaid of USD. They are ticker taped and can't be separated as the fall of one kills the other. The banks are all like flies in the same honey bowl, wallowing in the gluey goo. They will all die together like the gladiators of old. Ave Caesar...we die for global NWO. 

Mon, 07/23/2012 - 12:03 | 2642854 viator
viator's picture

"Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble plan to leave Berlin behind and go on summer vacation this week, the government said. Merkel, who has no appointments scheduled for this week, has already begun her vacation, government spokesman Georg Streiter told reporters today."

Mon, 07/23/2012 - 12:15 | 2642899 jmcadg
jmcadg's picture

That is class. Go on holiday whilst Spain and Italy burn. Hope she's not on a clubbing holiday to the Balearics!!!

Mon, 07/23/2012 - 17:15 | 2643755 Poetic injustice
Poetic injustice's picture

No, she is playing fiddle while watching them burn.

Mon, 07/23/2012 - 12:15 | 2642903 TrainWreck1
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* dreading paparazzi pics from a nude beach *


Mon, 07/23/2012 - 12:05 | 2642857 RSloane
RSloane's picture

We are watching the dissolution of the EU in slow time. Unless its broken up with some countries remaining together for monetary reasons, its all going to implode.

Mon, 07/23/2012 - 12:10 | 2642879 Benito
Benito's picture

Catalonia bonds Nov2012 yields higher than Uganda's 3-year bond


Mon, 07/23/2012 - 12:11 | 2642883 fuu
fuu's picture

Someone better step on gold, the rest of the ponzi is going to look stupid if gold goes green today.

Mon, 07/23/2012 - 12:13 | 2642891 daveeemc2
daveeemc2's picture

Theres been a great disturbance in the Force, as if millions of Spainards suddenly cried out in terror and were suddenly silenced.


Mon, 07/23/2012 - 12:13 | 2642892 slewie the pi-rat
slewie the pi-rat's picture

vite!  vite!  toot sweet~!

we need to sink another friendly ship, BiCheZ!

Mon, 07/23/2012 - 12:23 | 2642897 ChanceIs
ChanceIs's picture

Students of gold/silver will have noticed that it has become rather bullet-proof.  Both are now green here at noon.  There have been heavy attacks with every bit of non-positive news e.g. no QEIII post last FED meeting.  Pounding after pounding after pounding.  Silver sure seems to have a floor there at $26.50ish.

Does this mean an investable bottom??  I think so.  That is all very nice.

But it also might mean that the PMs have passed the point of being able to be manipulated.  Are we finally seeing the rise of an alternative currency?  Ned Naylor Leland gave a talking head on GoldMoney and announced that the new (Asian) silver exchanges are finally getting off of the ground.  Eric Sprott just did another offering and purchase for his silver trust (PSLV).  Gold is getting close to being consider as Tier I capital = fully marginable at the increasingly obviously insolvent banks.  The banks will want to hang onto it as it strengthens/justifies their balance sheets.  They will probably beg for mark-to-market gold accounting and be happy if gold soars. Just as long as real estate remains at mark-to-fantasy.

But relative to the point immediately above, if the PMs have morphed away from being Happy Valley toy-boys (tasteless I know, but it makes the point), just maybe they have regained their predictive capabilities.  And if that be the case........ouch.

Mon, 07/23/2012 - 12:23 | 2642928 MsCreant
MsCreant's picture

You are so optimistic. If you are smoking something good, please share.

Mon, 07/23/2012 - 12:27 | 2642939 Al Huxley
Al Huxley's picture

you underestimate the power of the dark side...

Mon, 07/23/2012 - 12:52 | 2643050 JenkinsLane
JenkinsLane's picture

If there's a Euroquake, which is definitely coming, it's just a question of when, IMO they'll both be hammered on the Comex at least.

Mon, 07/23/2012 - 13:46 | 2643205 geminiRX
geminiRX's picture

Certain large cap mining stocks are about the cheapest I have ever seen - at some point the capital flows will reverse and I think we are getting closer. 

Tue, 07/24/2012 - 09:48 | 2645236 MsCreant
MsCreant's picture

I don't worry about confiscation of PMs so much as nationalization of the mines.

Mon, 07/23/2012 - 12:23 | 2642927 vote_libertaria...
vote_libertarian_party's picture

Global QE whisper on Euro blog in 5...4...3

Mon, 07/23/2012 - 12:27 | 2642938 MsCreant
MsCreant's picture

What we need is: Ctrl+Alt+Del

Mon, 07/23/2012 - 12:37 | 2642977 ChanceIs
ChanceIs's picture

That will come but only after five more Ctrl+Ps.  Patience.  Remember these are politicians with which we are dealing.  They are the last to get it, and will do everything possible to keep from having their statues removed.


(GeeZee PeeZee.  I just can't let that Penn State thing go.  I didn't even go there.)

Tue, 07/24/2012 - 09:50 | 2645243 MsCreant
MsCreant's picture

Penn State is emblematic of everything wrong with our culture. Hard to let it go. It is a Koan if we just pay attention.

Mon, 07/23/2012 - 12:32 | 2642942 TrainWreck1
TrainWreck1's picture

One might keep an eye out to see who else (global financial/political leaders) are on holiday - good excuse for a double-secret meeting, n'est-ce pas?

Mon, 07/23/2012 - 12:58 | 2643074 Meesohaawnee
Meesohaawnee's picture

i picked a bad week to stop boning silvia wadhwa

Mon, 07/23/2012 - 13:10 | 2643115 Nobody For President
Nobody For President's picture

But other than those charts above that Tyler so kindly posted, things are great, right?

Mon, 07/23/2012 - 13:46 | 2643207 CryingBear
CryingBear's picture

who cares? aapl reports soon

Mon, 07/23/2012 - 15:04 | 2643436 unrulian
unrulian's picture

long RIM...

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