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French Yields Fall By Record, Other Sovereign Spreads Collapse Following Successful French, Spanish Auctions
The first, if very transitory, fruits of a US-taxpayer (insufficient) bailout of Europe bear fruit. This morning Italy’s 10-year yield has dropped below the psychological 7% barrier while the yield of Spain’s 10 year bonds is testing a break below 6% after strong auction results in France and Spain. As noted by Bloomberg, "easing funding concerns is also buoying core bonds as French yields drop the most on record while spreads on Austrian, Belgium bonds over bunds narrow significantly to break/test key 50- and 100-DMA supports." Naturally the safe-havens, Bunds and Gilts, slump, which makes the probability of another failed German auction remote as primary market demand will rise at lower prices. Specifically, in France the 10 year yield dropped -25bps to 3.15% the biggest decline since at least 1990; lowest since Nov. 9. France today sold €1.571 billion bonds due Oct. 2021, Average yield 3.18% vs prev 3.22% and a Bid/cover 3.05 vs prev 2.24. France also sold: €595 million bonds due Oct. 2017, at an average yield 2.42% and a bid/cover 4.4; €1.1 billion bonds due April 2026 at average yield 3.65% and bid/cover 3.24; €1.08b bonds due April 2041 at average yield 3.94% and Bid/cover 2.26. Elsewhere Spain also performed quite well: Spain met its maximum auction target today to sell EU3.75b in 3 bonds, fetching higher bid/cover ratios for all of them: Spain sold EU1.2b 3-yr bond due April 2015 bonds at an average yield 5.19% vs prev 4.27% and a bid/cover ratio 2.7 vs prev 1.66; also sold were €1.15 billion 4-yr bond due January 2016, an average yield 5.276% vs prev 5.187% and aid/cover ratio 2.83 vs prev 2.7, and €1.4b 5-yr bond due January 2017 average yield 5.54% vs prev 4.85% - a bid/cover ratio 2.69 vs prev 1.62. Yet in terms of outright liquidity, the primary beneficiary were USD-factors: 3-month Euribor/OIS spread continues to rise today to reach highest levels since March 2009 despite the concerted central bank actions on dollar swap funding, specifically the 3-mo Euribor/OIS +1 bp to 1.0 from 0.99 yesterday, highest since March 2009. However, funding strains ease further in cross-currency basis swaps. 3-mo EUR/USD cross currency basis swap +10.63bps to -120.63bps, least since Nov. 15.
All this said, in the aftermath of the biggest kneejerk reaction in the market since August, and the biggest 4 days Eurostoxx rally in years, successful autions were to be expeted. We give Europe a week or so before reality reasserts itself. In the meantime, risk is merely adding some additional vertidal distance before it has to be reacquainted with gravity all over again, and much more has to be done by the global central banking cartel.
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Fascinating. Hugo had this up on the previous thread...
http://imageshack.us/photo/my-images/845/francecollapsed.jpg/
Cheque Mate? Hah!
ORI
/the-plan/
Thanks ORI
The big issue gonna be Landesbank Balance sheet + Hybrids Balance.
Remember that Greece Haircut and Portuguese ReProfiling is a CREDIT EVENT - SO CDS has to be triggered- If this wont Happen ISDA are part of the biggest fraud ever.
If I have paid for a CDS and the collateral is 50% down with a reprofiling i want the money i have paid back....SO INSURANCE COMPANIES MUST PAY....
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France is not AAA its TOO OBVIOUS
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Market gonna suffer a big sell off
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Then after this black swan /predicted to be close to 29th december -------All Portfolio Managers Mandates has to swap AAA Bonds Ratings into new ones, as French is not AAA= here is where the IMF will appear to help France and Euro....creating a QE3...thats why Gold and Silver will rock to da moon.
Gold to 2.000
Silver to 50
*
SRS - INVERSE REITS GONNA BE a good play for 1Q12
Hungary, Croatia and Austria will blow up soon. Gold could be a good asset in the Permanent Portfolio as per http://inkom.com.au/How_to_Invest_and_Succeed_in_a_Bad_Economy
This is more a reflection of the collateral crunch in the repo markets and, in particular, scarcity of the best collateral.
Getting hold of Bunds is a PITA. Much cheaper to buy or borrow any other EZ sovereign, especially Spanish or Italian and then put this to the ECB for weekly funding.
Doesn't mean that the huge stresses in secured funding and the completely broken unsecured lending markets are suddenly working again.
The French still have a completely nonsensical sovereign rating.
The Italians have still locked in completely unsustainable yields, even under better covered auctions.
The only ones who may be sighing a small breath of relief just for December, are the Spanish. But they are all massively unemployed (21%+) with large private debts.
Also, as above poster notes, this retraction in lending (foreign first) is going to clobber the overextended Eastern Europe very soon.
Yupi ! Crisis is gone , fiat is not only best car , but best currency ....
Marketicus Histericus
excuse me and my english
The retail investor is shut out of this game that big dogs play.
Did you rush out and buy because of this central bank intervention?
1%'ers are circling the wagons.
Our role is cannon fodder.
No , i didn't , i'm kinda stock unfriendly lately, i preffer currencies.
Just because i'm from poland - it doesn't mean that i'm sheep :)
excuse my eng
NATIXIS= KAPUT
FRANCE IS NOT AAA
http://imageshack.us/f/845/francecollapsed.jpg/
French banks defaults (ALL IN A freaking CHAIN)
http://imageshack.us/f/821/francecollapsedcds5yrs.jpg/
FRANCE IS NOT AAA
Rating Agencies : LIARS, TERRORISTS....
Nice ones Hugo. I posted it up thread. Crazy world.
ORI
OH MY GOD ! OMG OMG !!! SO FREAKIN !
Seriously what's your problem? Which country is AAA? The US? France? Germany? Italy? UK?
LOL.
Saved by the Americans yet again.
I don't want to spoil the party, but I would write it differently:
"America saved the EuroDollar market yet again".
Jesse has some harsher words for this "I think the major monetization is already occurring in the Eurodollar markets, and an ongoing stealth bailout of European debt, in order to save the big money center banks at home and broaden the reach of the Dollar.
And this is why the Fed stopped reporting on Eurodollars some years ago, as a component of M3. It was to pave the way for the monetary equivalent of a financial neo-con, to addict European governance to the US dollar and pave the way for a stronger position for the dollar as a one world currency." (from http://jessescrossroadscafe.blogspot.com/)
This was reposted by him shortly before the 7th Cavalry showed up.
In my humble words, the MegaBanks "that happen to be based in Europe" just said: "Uncle Sam, give us more $ugar or we stage a fire sale of Dollar Denominated Assets. Ah, and merry Christmas."
The Federal Reserve is all ready trying to lower yields and the US dollar in the US. If you're not arguing that the Fed is kicking the can down the road, you have no point. The US dollar is already the world's reserve currency (which fucks over your average American). Basically the Fed is bailing out Europe to keep the "party" going. If the Fed didn't bailout the EU, the EU would collapse. I'm not saying the Fed shouldn't let the EU collapse sooner rather than later, but you make it seem like the Fed is buying Euro bonds out of its own self-interest. The Fed could buy the dollar denominate assets the EU would have dumped, or it could buy EU countries' bonds. The Fed bascially does what it wants..which is a problem.
I'm not pointing fingers to anybody except the MegaBanks, as I usually do. They originally wanted the ECB to bail out them "in Europe". Now they have found out that if they threathen to sell off the EuroDollar part of their balance sheets, Bernanke is willing to open the spigots.
Question: do we talk about the same "party"? And the same "collapse"? Please note that I quoted Jesse but in my own words I left off the "Dollar Dominance" part. The EuroDollar Market is important. The EuroDollar Market is now quite on top of Mr. Bernanke's worries. The ECB, the BofE and the SNB clearly said something like: "Ben, this is your child, too".
"but you make it seem like the Fed is buying Euro bonds out of its own self-interest" oh yes. But the FED is not buying the EuroBonds, it is financing cheaply the EuroDollar Dollar-Denominated-Assets on the MegaBanks balance sheets.
Yes, the EuroDollar is important to keep propping up, because the world economy would and will take a major hit once the EU collapses. First Moody's threatened to downgrade American debt and put them on watch, now they are threatening to sell of dollar denominated assets. The EU was twisting Bernanke's arm to bail them out. It obvious Bernanke doesn't need too much arm twisting to waste (no offense) dollars by throwing more money at a problem, which was started by easy money.
"but you make it seem like the Fed is buying Euro bonds out of its own self-interest" oh yes."
I disagree.
perhaps because you have not caught this part?
"But the FED is not buying the EuroBonds, it is financing cheaply the EuroDollar Dollar-Denominated-Assets on the MegaBanks balance sheets". There is the interest of the FED.
And the "armtwisting" is not coming from the countries of the EU, it's by the MegaBanks in Europe - which in turn are being armtwisted by the EU to keep the EuroBonds, so in turn they are "forcing" the FED's response.
I'm sorry if this is complex - it's just the way it is. Conspiracy theories have one big bonus: they are simple.
Human Action is complex. Ludwig von Mises wrote a nice book about it.
Viva la Obama! The World was saved yesterday, again:(
It's Bernanke, not Obama. Obama does share responsiblity for this action by reappointing Bernanke as Fed Chief, but Bernanke is primarily to blame.
Oh, I know. I just like the way "viva la" goes with Obama! Doesn't roll as nicely with Bernanke!
On the contrary, this was not a U.S. tax paper bailout. This was not even a bailout. This is and was merely more counterfitting by the International banking cartel, with the full-fledged endorsement of ESF, Exchange Stabilization Fund (Treasury). And it does not buy more time, case in point September 08'. OK, maybe a few weeks, fair enough.
The fact of the matter is the Federal Reserve has a major problem on their hands as the Chinese have sued (it's owners) claiming they have illegally accessed the global collateral accounts for decades; hence their access to the trading platforms have been subdued and certain factions will be looking for trillions of dollars in damages. This is a real story, one we will addressing soon.
The debt of the U.S. Corporation, the Federal debt, is that of and only the Federal Reserve (the RotChilds, D.C. Corporation and the Vatican). Kyle Bass is spot on, it's end-game. Although he comes from a different angle of the equation as say I do, we all end up at the same place: GAME OVER.
What we are watching is the final days and weeks (maybe a few months) of a criminal gangster cartel of hoodlums, financial terrorists, pdeophiles, murderers and made-men as they try to starve off the impossible, bankruptcy (and jail). This train has left the station and isn't coming back.
At some point next year, the debts of the world will go back to where they came from, the nothingness -- and a lot of people will be going to jail. The odd's of these events are 100%.
BTW: I am happy to show you the 114 suit, which was filed last Wed in NY court on behalf of the real wealth owners of this planet. The parents have come home to take the keys from the kids and punish them for their horrible deeds.
But yet...until we get into the end-zone, it's extremely pain-saking to watch it play out, and then have to hear the play by play of the Muppets on TV. I heard CramAmerica say yesterday "OK, so maybe it has been worse off than we originally though?". Give me a break! Dork...
Stay Thirsty,
Not by the americans, by the american oligarchs who OWN the euro banks as they want to protect their 25 T stash in off shore tax havens, the REAL shooting match. Don't confuse those who run the world with those who run behind like blind mice...tragedy of our times.
Does this mean that the panic is over ? I think not.
It means the entire West has lashed itself together, just like all US banks are tied together by the FDIC.
All will fail at once, and it will be catastrophic beyond anything seen in a thousand years. We can only hope that our technology will change the outcome such that we don't enter another Dark Age.
Golly, why didn't they just do this much earlier and avoid this whole 'crisis' thing? Clearly, there's no downside....right?
I believe Bof E told the story this morning, they are preparing for euro break up
I would "prepare for euro break up too" if I would be leading the B of E.
It's a good cover for "preparing for the next storm over Old Blighty"
"Naturally the safe-havens, Bunds and Gilts, slump, which makes the probability of another failed German auction remote as primary market demand will rise at lower prices." Ah, how I cherish the "logic" of the AAA "investment".
To be frank, Germany's auction was a bit show and a bit a "let's try it".
the ponzi survives another day
what we saw yesterday was an injection of artificial CONfidence in global markets, just in time for the consumer spending season of the holidays. January will be the hangover
watch the price of gold, about to break out of its flag/pennant with a price target of $2400 by May 2012
Wonder which French bank we bailed out yesterday........
According to 2yrs CDS has been Credit Agricole
Deutsche Bank tells me Natixis, but Natixis is not such huge to move the central banks, so i bet
SOCGEN
BNP
CREDIT AGRICOLE
why?
Societe Generale Holds the worst derivative book losses in Europe with estimate of > 193.000 MN (in october) now could be 1-5% more.
BNP still holds 27.000 Mn debt in Italian debt....
Credti Agricole has a big hole with Emporiki Bank- (Greek Bank) - Bankruns - Completly non capitalized bank. They gonna sell it and take losses > 8.000 Mn Euros.
http://imageshack.us/f/845/francecollapsed.jpg/
The correct question is which French bank did we NOT bail out yesterday.
Well the actual rate cut on the $swaps does not start until 5 december. Should it not be expected that liquidity won't change that much until the 5th of december?
Looks like the crisis is finally over
hallelujah, BiCheZ!
The ponzi scheme continues for the banksteres
Buy GOLD!
And to think Corzine would be right on his bets .......but his greed should put him in jail
I cannot wait to see how much the Fed's balance sheet expanded on this.
And, the mechanical grind up of futures just resumes as normal.
..the markets across the world are darker black boxes then any small investor has ever seen..the insiders seem to be unable to stay on one side of the trade because they are now blind as well.
the fed keeps telling us they have more weapons left, but they do this small intervention, when the mega bomb is what is needed..400 point up day after multiple down days says the crowd ain't buyin the BS.
if we follow thru in the next few weeks of up days then I was wrong, but I will have kept my capital out of risk assets.
If I am right, the gov has planned for the army in the USA to control the population ( per recent senate actions)..they are taking steps that are unconstituional and blantant yet are up for reelection in less than a year?? What have they been told?
Yep it's working, treasuries and jgb's are down.
The Morning After The Global Central Banks Ride To The Rescue! But The Eurozone’s Leg Is Broken and Central Banks Are Applying Gallons of Bengay As Treatmenthttp://confoundedinterest.wordpress.com
ummmm...so how much of that buying was by gvt or gvt supported entities?