European Implosion Resumes With Italy Firmly In The Vigilantes' Sights

Tyler Durden's picture

The duration of the European bailout was 48 hours give or take. And now reality is back in the form of the following headlines:

  • Italian 10 Year BTP Yield surges to all time high 6.153% before ECB intervention takes it back to ... 6.122%
  • Expressed in price, they have dropped to a record 90.697
  • Italian-German 10 year yield passes 400 bps
  • Italy CDS soar 22 bps to 427 bps
  • Italy 5 Year yields bonds join drop, yield rises  to over record 5.91%

See a trend? The one thing Europe was trying to avoid, contagion spreading to Italy, has happened.

And in other news, German retail sales 0.4% M/m vs est. 1.0%; Italian unemployment 8.3% vs est. 7.9%; Norwegian retail sales -0.5% M/m vs est. +0.2%, EU-to-German yield spreads all wider, significantly for Belgium, Italy, Spain, ECB deposit facility usage soars to €248 billion on Friday, up €30 billion on the day and just $21 billion off the 2011 high of October 10 (with 10 more days in the current cycle, we will see a new record in a few days). iTraxx resumes surge, XO up 18 to 636, Fins up 6.5 to 214 bps, even with sovereign CDS now irrelevant. How long before corporate CDS are banned? Yet despite all the news, the EURUSD is still firmly planted at 1.4000. Just as expected, the weak-hand shorts take every dip opportunity to cover. Fear not: opportunities will be ample in the days ahead.

Italy 10 year Price:

Italy 10 year Yield:

ECB Deposit Facility usage: