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Italian Clearing House CC&G Cuts Italian Bonds Margins

Tyler Durden's picture




 

There was a pop in risk minutes ago after a headline hit that margins on Italian bonds had been cut by CC&G. Enthusiasm will likely be muted however, upon the realization that CC&G is an Italian clearing house, is not LCH Clearnet in any of its two variants, and is tantamount to (French) Fitch upgrading France in terms of relevance, especially when considering that the bulk of Italian bonds clear elsewhere. That said, this will likely be taken by the market as a hint that LCH may go ahead and lower margins next, although with Italian bonds trading back above 6%, the case may be a problematic one. Of particular note in the CC&G announcement is that the margin for bonds between 7 and 10 years was lowered from 11.65% as of November 9, to 8.15%. As for whether this is a harbinger for more margin cuts, we will likely find out soon.

BTPs rallied immediately post the last margin RAISE (on Nov 9th - orange dotted line) and we note that today was the biggest drop in price for the 2021 BTP in two weeks (and spreads jumped dramatically as we noted earlier today). We can't help but notice some eery similarities with the recent price action and the last ECB SMP-induced excitement in the summer. Did we rally back in BTPs only to fill that August gap to enable managers to cover? Something tells us that CC&G will be hiking rates again soon as the 6% yield barrier is broken the wrong way again.

 

 

 

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Wed, 12/07/2011 - 13:58 | 1955435 jabaykhan
jabaykhan's picture

excellent bullish move!

will buy more btps

Wed, 12/07/2011 - 14:00 | 1955445 knukles
knukles's picture

"Desparation is the Euro way"
     -
apologies to Pink Floyd

Wed, 12/07/2011 - 14:08 | 1955474 NotApplicable
NotApplicable's picture

"Oh, by the way, which one's Pink?"

Wed, 12/07/2011 - 14:09 | 1955477 LawsofPhysics
LawsofPhysics's picture

Could be, a fair amount of liquidity in those bond markets still that are desparately seeking returns in the short term.

Wed, 12/07/2011 - 14:00 | 1955437 GeneMarchbanks
GeneMarchbanks's picture

'There was a pop in risk minutes ago after a headline hit that margins on Italian bonds had been cut by CC&G.'

Thank you Larry Fink and BLK.

Wed, 12/07/2011 - 13:59 | 1955442 kalasend
kalasend's picture

What's the indication of this?

Margin cut = more shorts = higher yield?

Wed, 12/07/2011 - 14:00 | 1955443 Eally Ucked
Eally Ucked's picture

Who the hell cares about margin, where they get all those$ to lend to their clients?

Wed, 12/07/2011 - 15:39 | 1955778 defn8Dog
defn8Dog's picture

Cut to the shot of Geethner's coat pocket, where the edge of the US checkbook is peeking out.  Oh, by the way, the IMF needs another 120 bn USD to make that new loan program work.  A little more than that  payroll tax cut on our christmas list.  C'mon kids, let's give in the spirit of the season.  The Italians are having to wear last year's designer watches at this point. 

Wed, 12/07/2011 - 14:01 | 1955450 SheepDog-One
SheepDog-One's picture

Hell why not just cut everything to zero, and of course match it with margin hikes again on gold and silver, since theyre SO worried about 'speculator shenanigans' in that HUGE market... but for all you bond and equities buyers theres no risk at all, its a celebration, bitchez!

Wed, 12/07/2011 - 14:03 | 1955454 RobotTrader
RobotTrader's picture

Euro bears about to get destroyed

 

Same with all the schlubs who bought sov debt CDS and didn't sell when they went parabolic last week

Wed, 12/07/2011 - 14:06 | 1955465 SheepDog-One
SheepDog-One's picture

Right, just like your great call this morning that oil is destroyed....presently back at $101.30.

Wed, 12/07/2011 - 14:12 | 1955485 RobotTrader
RobotTrader's picture

Gasoline chart speaks for itself.

Sorry....

9 mo. lows today

http://66.70.86.64/ChartServer/ch.gaschart?Country=Canada&Crude=f&Period...$/G

 

Wed, 12/07/2011 - 14:15 | 1955491 CvlDobd
CvlDobd's picture

Is gasoline low due to supply or what's that other word?

Wed, 12/07/2011 - 14:31 | 1955538 SheepDog-One
SheepDog-One's picture

AH yes I see....whichever chart fits your bias best is the relevant one.

Wed, 12/07/2011 - 14:38 | 1955568 CvlDobd
CvlDobd's picture

Not sure I that was directed at me or Robo. Fundamentally I'm a bear. Technicals are mixed IMO so I try to find high R/R shorts. No leverage for me in this environment.

I got another arrow in my bear quiver, on a 6.5% pnf RS chart WMT is in favor over SPX. Bulls better respect a strong WMT. It is rare for anything good to happen while WMT is a strong stock.

We shall see, I'm holding my XLK short for now.

Wed, 12/07/2011 - 15:10 | 1955678 SheepDog-One
SheepDog-One's picture

No of course Robos 'gasoline chart' the trailing indicator, is what best suits him for now so thats the chart he posts.

Wed, 12/07/2011 - 15:20 | 1955717 binky
binky's picture

It was directed at Robo. Let me take a crack at it:

 

Gasoline prices are determined mainly by speculators in New York City and can be manipulated quite easily - up or down - if you have enough muscle. For example, the following  http://www.lewrockwell.com/orig7/stojan1.html  which I have posted before is one of many examples. Seasonal slack demand and the sell gasoline buy heating oil trade is another. Most important is the keep gasoline from being too high-priced for too long or the Federal Reserve Bank of New York ends up being torn down brick-by-brick trade.

Wed, 12/07/2011 - 14:04 | 1955457 lolmao500
lolmao500's picture

OT : anyone knows the mortgage rates in Greece? Have they gone up or down since the crisis began?

Thanks

Wed, 12/07/2011 - 14:13 | 1955486 blu
blu's picture

It's always darkest just before it goes completely black.

Wed, 12/07/2011 - 14:34 | 1955547 sabra1
sabra1's picture

"Pitch Black" great movie!

Wed, 12/07/2011 - 14:26 | 1955518 vote_libertaria...
vote_libertarian_party's picture

So Italian bonds are considered SAFER now?

 

ha ha.....hahahhhahaahahaaa OWWWWWWWWWWWWWW I busted a gut

Wed, 12/07/2011 - 14:46 | 1955592 Snakeeyes
Snakeeyes's picture

Italy's economy blows. They have to do something, other than generate massive riots.

Rumble on The Rhine – Uncertainty About The Eurozone Treaty (Italy, Spain and Belgium Yields UP)

http://confoundedinterest.wordpress.com

Wed, 12/07/2011 - 15:01 | 1955647 scratch_en_sniff
scratch_en_sniff's picture

I think they might be lowering margins in the hope that people will be rushing to buy them when the ECB gets the green light to print...hence this cut could be the clearest sign that the wheels are already in motion. 

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