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European Sovereigns And Financials Close On Weak Tone

Tyler Durden's picture




 

Once again European credit and equity markets flip-flopped intraday from a gap up open (yay, the PSI deal is done) to a modest financial-led selloff on weak data, to a non-financial-led small rally (with equity beating credit post US NFP) to a slide weaker into the European close. Financials (most notably senior unsecured) were the worst performers on the day as stocks managed small gains and credit bigger losses. European sovereign spreads also leaked wider all day after some initial excitement with Italian 10Y spreads 15-20bps off their best levels of the week into the close (and Portugal also leaking wider). US Treasuries continued to selloff as US equities limped higher but EURUSD is pushing back to the week's lows near 1.31 as JPY is also deteriorating (which is modestly stable for carry FX and implicitly risk). Commodities surged (seemingly on Goldman's GDP cut implying great er hopes of QE?) with Gold up over $1710 and almost unch for the week as WTI nears $108 again. As Europe closes, there is a modest derisking across all asset classes (with US and European financials the most obvious rollers). The Precious metals rip and Treasury weakness makes us wonder how much is QE-driven (especially given the sterilized propositions) and how much is simply a rotation to a different kind of safety or quality collateral? The LTRO Stigma is around 8bps (or 10%) higher on the week while Senior-Sub spreads are stable for now.

Europe ended on a weak note with financials leading the drop (and credit underperforming)...

 

as Sovereigns were weak from just after the European open - with little respite...

But EURUSD (and most majors) are weaker as the USD makes week's highs...

 

Charts: Bloomberg

 

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Fri, 03/09/2012 - 13:09 | 2240010 DavidC
DavidC's picture

I'm still no wiser as to why the stocks have ramped the way they have today.

The unemployment data is ambivalent, Greece is downgraded (it's not finished by a long chalk) and the US trade balance has its largest three month drop in 20 years.

Russell up nearly 2%, NASDAQ up nearly 1/2%... And this BULLISH?!

DavidC

Fri, 03/09/2012 - 13:10 | 2240043 slewie the pi-rat
slewie the pi-rat's picture

in the absence of a disaster or three in the euro-zone or the financial world, perhaps the shorts are closing their positions and getting ready for the hookers and blow parties tonight

as all sane BiCheZ should consider, too, in the styles to which they are now accustomed...

the IDSA party is making buy things, too

tyler is completely wasted, already!

 

Fri, 03/09/2012 - 13:42 | 2240181 resurger
resurger's picture

Am bleeding on my shorts big time ... but am not closing, ill hold till the last penny in my account!

 

Fri, 03/09/2012 - 13:05 | 2240024 slewie the pi-rat
slewie the pi-rat's picture

screwed down tight

not too shabby 4 the bad guys and fuking zombies

wtf.  personally, i'll take it

Fri, 03/09/2012 - 13:12 | 2240050 Tao 4 the Show
Tao 4 the Show's picture

If you think that world leaders are currently trying to manage world affairs by fudging "credit events", it helps snap one out of the surreality of it all and realize the financial world continues to hang by a thread.

Fri, 03/09/2012 - 13:17 | 2240079 Rathmullan
Rathmullan's picture

And they'll be a lot weaker on Monday after the ISDA declares NO credit event on Greek debt which I can only presume will be the case as they have been deliberating for over 4 hours now.

Fri, 03/09/2012 - 14:07 | 2240271 Nobody For President
Nobody For President's picture

double post

Fri, 03/09/2012 - 14:06 | 2240299 Nobody For President
Nobody For President's picture

I'll take the over on that. The big boys have had adquate time to cover their butts, and who gives a shit about the smaller Euro banks (Italy) that may have a bit too heavy an exposure? Take a look at the ISDA Euro determination committee for christs sake:

 

http://www.isda.org/dc/committees.html#EMEA

 

Bank of America / Merrill Lynch
Barclays
BNP Paribas
Credit Suisse
Deutsche Bank
Goldman Sachs
JPMorgan Chase Bank, N.A.
Morgan Stanley
Société Générale
UBS

 

The stabilllitteeeeeeeeeee of the CDS system is on the line, and it is way too profitable to not take the *relatively* minor lose now  - you think the above organizations making the decision are not faded by now? The "deliberations" are probably over how to put a happy face on the wording of the 'credit event'.

Fri, 03/09/2012 - 15:42 | 2240726 Nobody For President
Nobody For President's picture

http://www.derivativesintelligence.com/Article/2993015/News/ISDA-Confirms-Greece-Credit-Event.html

 

Got somethun' right...(Breaking my arm patting myself on back) ;-)

Fri, 03/09/2012 - 14:41 | 2240434 digalert
digalert's picture

I'm looking at some of that new currency, unch. Is it stable? Will my puchasing power be the same next week, or does it float at the whim of magical central banksters?

Give me unch or give me gold.

 

Fri, 06/29/2012 - 10:28 | 2573163 l.hauri
l.hauri's picture

I read about it and we can not control it. We will read more about it! draw something cheat

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