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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jabaykhan's picture

excellent bullish move!

will buy more btps

knukles's picture

"Desparation is the Euro way"
apologies to Pink Floyd

NotApplicable's picture

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

LawsofPhysics's picture

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

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.

kalasend's picture

What's the indication of this?

Margin cut = more shorts = higher yield?

Eally Ucked's picture

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

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. 

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!

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

SheepDog-One's picture

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

CvlDobd's picture

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

SheepDog-One's picture

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

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.

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.

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  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.

lolmao500's picture

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


blu's picture

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

sabra1's picture

"Pitch Black" great movie!

vote_libertarian_party's picture

So Italian bonds are considered SAFER now?


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

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)

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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