French, Italian CDS Hit Record, Yen Resumes Climb

Tyler Durden's picture

After a brief intermission in which even the robots apparently took some long overdue shut-visual sensor, things are back in motion, with both French and Italian CDS pushing out to record wides, France hitting 150, 7 bps wider, while Italy rising 15 bps to over 405 bps at last check. And what is more disturbing for all those who keep pounding the table that Spain should blow up first dammit so stop looking at Italy, Italian 10 Year yields just surpassed those of Spain, for the first time since April 2010. Elsewhere, as Bloomberg reports, the Yen has resumed its rally as the BOJ, has ceased its intervention after spending over Y4 trillion according to some accounts, only to realize what we said from the beginning: the yentervention will fail. "Both BOJ and SNB have made clear they oppose further currency appreciation but absence of other safe-haven alternatives means the yen and swiss franc will remain in demand", Lutz Karpowitz, strategist at Comerzbank, writes in note. And some more observations courtesy of Bloomberg: "Confidence is waning over EU policymakers’ ability to contain debt crisis, Derek Halpenny, strategist at BOTM-UFJ writes in note. These will make it all the more difficult for BOJ to find intervention success in yen. Without further BOJ intervention, intensifying risk aversion will result in further yen gains, Halpenny adds." What is ironic is that the Italian stock market is rebounding rapidly from overnight lows of -3.and 5%, is now green courtesy primarily due to alleged additional ECB bond purchases of Italian bonds, which rumor has in turn stabilized Italian financial stocks which are, as expected, soaring. We are confident this response will be as transitory as all other central bank interventions.

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GetZeeGold's picture


Nigel Farage could so totally take Chuck Norris.


Use of Weapons's picture

She just had her wings pulled off:

She is accused of wrongdoing over her role in a €403 million ($543m) payment to businessman Bernard Tapie when she was the French finance minister.

Opposition leaders in France initiated the case against her after claiming that the payment had been a way of rewarding Mr Tapie for switching political sides to support President Nicolas Sarkozy during the 2007 election campaign.

Ms Lagarde issued a statement through her lawyers in which she ruled out resigning from her IMF job, which pays $US467,940 ($447,853) a year. She denies any wrongdoing.


What amazes me is that a) we all knew this before she was elected and b) why hit her yesterday?1



In other news, I just had a 'condolences on your accident' notification, so keep it frosty all - house cleaning time. Titannic out.

  • 1. Snark intended
LMAO's picture

And right now, Olli Rehn making a live statement on Euro-zone problems.

He installs that much confidence in as to how they are going to solve the problems that it leaves one cowering in a corner in fetal position. The way in which he assures us he's confident is uncanny to say the least.

iNull's picture

"brief intermission in which even the robots apparently took some long overdue shut-visual sensor"

There will come a time Tyler when you realize the universe is conscious. And that every act, no matter how small, is recorded.

duncecap rack's picture

Why is the Euro rallying?

ZeroPower's picture

EU's Rehn doing damage control.


Ghordius's picture

The Euro is not rallying. Take off the Dollar/Pound glasses and you'll see it.

ZeroPower's picture

No mention of Hungary? CDS @ 387/402 from 395/435 this morning (lol @ MMs for capturing b/o).

Belgium 258/278 this am, bit tighter now with SovX WE tightening as well. Definately a sov to watch the next weeks however.

Ghordius's picture

What is this confidence in the CDS market? Why should the CDS be any indicator of the real "chances of default"? This is silly.

The Spanish and Italian Bond markets are now political.

On one side you have huge amount of debt, mostly owed by Europeans to Europeans. Amount= X

On the other side you have humungus amounts of BETS on this debt, mostly owed by TBTF banks to TBTF banks. Amount = X times Y

The CDS beast has to be fed. Something has to happen - in the bizzarro world of the derivatives. The underlying has nothing to do except to do what the casino winners want.

wang's picture
wang (not verified) Aug 5, 2011 6:00 AM

Weinberg on Bloomberg a half hour ago - sees   upward revision for previous jobs report and a 130 print in today's



FunkyOldGeezer's picture

Why take the word of / listen to one or two strategists when the whole game is rigged.

Perfect example: at 11:43- 11:44 BST both the Italian, Spanish and US idices began a small sell off, from the top of the day so far, only to rebound from that minor bottom at 11:48 - 11;49. Why else would these three indices move together so beautifully in almost perfect sync???


kito's picture

 what happened with those italian bank runs????? 

Instant Wealth's picture

Check Wiki and learn the following.

José Manuel Barroso was a member of a Maoist Party in Portugal. Angela Merkel was raised in the former GDR, a soviet puppet state. She was an "Aparatshik" in the communist youth organization "Freie Deutsche Jugend", teaching "AgitProp". Some even say she has a Stasi-file under the name "IM Erika".

It´s all too obvious. They are trying to destroy "corrupt capitalism" from within.


HarrisonBergeron's picture

This whole system has hemochromatosis, let it bleed.

FunkyOldGeezer's picture

.....but the central banks don't have enough 'metal'.


This whole system has hemochromatosis, let it bleed.

Instant Wealth's picture

Someone wrote recently, should Italy go down the drain, the EFSF has to be raised from 440 billion to 4 trillion euros. (?)

falak pema's picture

Correlation wise one could also say the cost of sustaining the WS + derivative ponzi is too high. So you can take your pick and choose which one takes the other to the bottom. 

When you hitch a ride on a scorpion's back to cross a river, and mid-stream, if the scorpion bites you saying... I don't know how to swim but I'm going to bite you anyway 'cos that's what a scorpion does...then you know you are in the financial world of today! 

chump666's picture

pre open/futures starting to tank.NFP looks like it will be crap number

chinawholesaler's picture

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