On Friday, when we discussed that the EFSF could potentially be expanded to a ridiculous E3.5 trillion, we made the following observation in advance of the prediction that Germany would eventually throw up all over the creeping euro bailout proposal, we said: "In the meantime, short Bunds (or to borrow a Gartmanism, go long gold in Bund terms) ahead of the market's realization that peak risk transfer from the periphery to the core is now in process." Well, the first eurobond prints are in (we already know where gold is trading), and the losers (and winners) are...
- Bund 10-year yields +12bp; France yields +11
- Italy 10-year yields -50bp; Spain -37bp
- Greece 1-year yields -8bp; Portugal +14bp
- Bund 2-year yields +8bp; France +8bp
- Italy 2-year yields -59bp; Spain -54
- Greece 2year yields -19bp; Portugal +13
Yes Germany: it is one thing for us to predict that your country will soon foot the bill for all of peripheral Europe. It is another for the market to agree.
It is still not too late.