This page has been archived and commenting is disabled.

Italy 2s10s Inverts For First Time Since August 1994 As French and Spanish Spreads Widen To Records

Tyler Durden's picture




 

Dismal data from French manufacturing and industrial production along with growing chatter of a 'core' Europe strategy having been discussed is sending spreads among sovereign bonds notably wider. As a reminder Italy faces a rather large 1Y bill auction later this morning and the front-end of the BTP curve is underperforming as 2s10s inverts for the first time since August 1994.

While 5s10s has been inverted - due to CDS basis technicals - for a few days, the inversion of the 2s10s curve is truly the death knell. There were a few moments yesterday when 2s10s did invert but most were mis-timing on trades but this morning we crossed trades at almost 12bps differential in 2s10s - more inverted than yesterday.

French spreads just broke 152bps and Spanish spreads to Bunds also broke to new record wides.

Chart: Bloomberg

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 11/10/2011 - 04:01 | 1864913 devo
devo's picture

ZeroHedge, can you guys write a piece on Obama's rash of executive orders? I know it's outside the scope of financials, but it's really important for people to realize that this guy has declared himself king.

Thu, 11/10/2011 - 04:07 | 1864921 DrunkenPleb
DrunkenPleb's picture

You know there's a whole internet out there... right?

Thu, 11/10/2011 - 05:00 | 1864965 Ethics Gradient
Ethics Gradient's picture

But this part of the internet is probably the best. And now we have a nightshift!

I suspect we're getting pretty close to: http://www.youtube.com/watch?v=vVof0qj7SOw

Edit: Italian bond yields crashing Biblically. Has Germany taken the muzzle off the ECB or have America and China decided enough is enough?

Thu, 11/10/2011 - 05:03 | 1864996 Oh regional Indian
Oh regional Indian's picture

I see the fact that ZH is up all night as extremely bearish.

Eurozone crumble in real time. AND STILL NOT A PEEP ABOUT SPAIN! that is a tell that there is day or three's can-kick left in th esystem.

Those hot-bloods will brign the house down. The rest of the EU is gutted (mostly) and probably starting to get a  little chilly.

ORI

Paying Attention

EDIT: So Spain did get a last line mention. Watch it zoom into the Bull's Eye (Hah!) soonish. You can butcher El Torro only so long. Finally, El Torro butchers you.

Thu, 11/10/2011 - 05:39 | 1865034 Element
Element's picture

Yeah, been waiting for Spain to blow ... you just know it will ...

Thu, 11/10/2011 - 05:02 | 1864997 French Frog
French Frog's picture

Moody assigns Aaa rating to EFSF 10 yr bond; could be reason for pop up in Euro/futures...

http://www.moodys.com/research/Moodys-assigns-Aaa-rating-to-EFSFs-new-10-year-benchmark--PR_230455

Thu, 11/10/2011 - 04:42 | 1864968 EscapeKey
EscapeKey's picture

Um, infowars.com is that ==> way.

 

Thu, 11/10/2011 - 07:12 | 1865113 BandGap
BandGap's picture

One of the princes crashed last night.

http://www.youtube.com/watch?v=BhDhDRvHaGs

Thu, 11/10/2011 - 04:01 | 1864914 qussl3
qussl3's picture

Draghi's got big balls.

At this rate he may drive Germany nuts lol.

Thu, 11/10/2011 - 04:29 | 1864944 knight99
knight99's picture

no what would drive Germany nuts is him being a lender of last resort. I think Germany likes the hard ball he is playing. If 10 yr can break 8% all bets are off everywhere. I need to ADD to my SP 500 short looking way to high at these levels.

Thu, 11/10/2011 - 04:37 | 1864960 qussl3
qussl3's picture

Italian and French banks blowing up would drive even the Germans under.

Much as the ECB is acting like how the Buba would, it isnt the Bundesbank.

IF the banks go under even Germany takes a bath.

Thu, 11/10/2011 - 04:01 | 1864916 bigwavedave
bigwavedave's picture

ding ding.....ding ding.....ding ding

Thu, 11/10/2011 - 04:04 | 1864918 Barry Freed
Barry Freed's picture

I was about to go to sleep but this train wreck needs to be observed.. time to crack another beer.

Thu, 11/10/2011 - 05:05 | 1864990 IrritableBowels
IrritableBowels's picture

That was me yesterday during US market session, complete with Newcastle induced powernap of 2.5 hours before 12 hour nightshift.  If it looks ripe, I may do it again.  Calling out sick this time for sure, though.

Thu, 11/10/2011 - 05:11 | 1865004 you enjoy myself
you enjoy myself's picture

seriously.  though 'train wreck' might not be the best description if you're referring to this sham of a market. /ES just popped to +8.50.  why do i get the feeling we're due for another two weeks of +/- 50 pt days like in august? 

you're absolutely nuts to be in this market as a retail investor unless you're just playing with options.

Thu, 11/10/2011 - 04:08 | 1864922 Belarus
Belarus's picture

I don't get the German bond buying, if Italy goes down: Germany is screwed too, which makes German Bunds no safer than Italian bonds. The only safe haven is Gold. I'm guessing pensions etc. are doing the Bund buying but still....if you can buy Bunds for under 2%, you might as well buy Italian bonds over 7% due to the correlation. 

It seems like it's a matter of time before the ECB is simply forced to monetize. Or else. 

Thu, 11/10/2011 - 04:12 | 1864924 qussl3
qussl3's picture

When your hair is on fire, gasoline looks like water.

Thu, 11/10/2011 - 05:16 | 1865011 Peter K
Peter K's picture

Classic, can I use it?

Thu, 11/10/2011 - 06:13 | 1865064 qussl3
qussl3's picture

If you take that damn paper bag off, sure :)

Thu, 11/10/2011 - 06:47 | 1865089 Temporalist
Temporalist's picture

My version:

When you've snorted detergent thinking it's cocaine, a jar of urine looks potable.

http://www.youtube.com/watch?v=8NIjjfRjJXU

Thu, 11/10/2011 - 04:17 | 1864932 Augustus
Augustus's picture

All of the cash cannot go to gold, or will not be directed there.  Gold continues to be viewed as speculation.  Cash comming out of Greece and Italy markets want a parking place where it earns a little and can be retrieved 100% in a few days, weeks, or months.  What will the price of gold be next week?  No way to tell.  But you might look for it to be higher priced in a year.

Thu, 11/10/2011 - 04:24 | 1864939 qussl3
qussl3's picture

Exactly.

The vast majority of dry powder simply cannot go into gold because it is controlled by MMs who are mandated to NOT invest in the stuff.

Eventually people will wise up and withdraw from the system and then redirect said slosh into the PMs.

This has begun to happen, still only a trickle, but it will turn into a flood.

We will probably still have to flood into paper PMs first before the herd realizes that particular folly.

What will be interesting is how the establishment will attempt to gate funds from leaving their control and make gold even more of a hassle to buy.

 

Thu, 11/10/2011 - 04:29 | 1864946 devo
devo's picture

Right, my big fear about PMs is how government will hose holders. I envision a black market for metals.

Thu, 11/10/2011 - 04:43 | 1864972 EscapeKey
EscapeKey's picture

Don't worry. We've always got that Israel-Iran conflict card which can be played at any time, should the economy need further public sector spending.

Thu, 11/10/2011 - 04:13 | 1864926 Fips_OnTheSpot
Fips_OnTheSpot's picture

Tic-Tac-Tic-Tac

Thu, 11/10/2011 - 04:18 | 1864933 Brooklynnative
Brooklynnative's picture

ES up 10 pointsi in minutes.  What's going on???!!! What's the headline??? Tyler you nappin' or what?? Get on it!

Thu, 11/10/2011 - 04:27 | 1864942 chump666
chump666's picture

italian bond auction specs, the ecb will buy up.  won't do sh*t 

Thu, 11/10/2011 - 04:33 | 1864951 Fips_OnTheSpot
Fips_OnTheSpot's picture

ECB cannot buy on primary market...

Thu, 11/10/2011 - 05:15 | 1865009 Ethics Gradient
Ethics Gradient's picture

But they can buy €100bn on the secondary. Or America can. I'm half expecting an announcement by POTUS that he's just bought Europe to safeguard the stability of the US.

Thu, 11/10/2011 - 04:33 | 1864954 qussl3
qussl3's picture

Isnt this a primary auction?

The ECB's SMP can only buy from the secondary market if memory serves.

Thu, 11/10/2011 - 04:47 | 1864979 chump666
chump666's picture

the whole world knows that the ECB will buy up in the 2nd market...unlimited.  so i guess the market is waiting for the print job from hell to start up.   

Thu, 11/10/2011 - 04:48 | 1864981 Fips_OnTheSpot
Fips_OnTheSpot's picture

time gap, if there's a bidless market. Hmm, whatever, we'll see.

Let's order more bullion ...

Thu, 11/10/2011 - 04:52 | 1864986 chump666
chump666's picture

buy gold because Europe is going to be in a world of hurt, they simply cannot get out of this one

Thu, 11/10/2011 - 06:18 | 1865068 reload
reload's picture

Serious ramp job in euroland - as far as I can tell the good news was confined to Deutche Telecom having decent results. Viscious squeeze - right from the open, which was for the FTSE right on some good horizontal support so the opening action was not odd at all. The way the markets just carried right on up with no more than a 12 tick pull back was -- awful, if you were looking for levels to re short. We speared right up through several levels which ordinarily would have produced some decent 2 way action.

Intervention? your guess is as good as mine, but definately odd price action.

Anyone for Roulette?

Thu, 11/10/2011 - 04:25 | 1864940 chump666
chump666's picture

...there goes France.  The ECB go mental with the bond buying/print job they will send a wave of inflation to Germany.

Thu, 11/10/2011 - 04:27 | 1864943 Brooklynnative
Brooklynnative's picture

Futures turning up on news that Greece has named surprise new Prime Minister.....Berlusconi!

Thu, 11/10/2011 - 04:50 | 1864982 chump666
chump666's picture

+1 for being from Brooklyn

Thu, 11/10/2011 - 04:33 | 1864956 cdude
cdude's picture

ES just went green @3am......what a joke!

Thu, 11/10/2011 - 04:39 | 1864963 Belarus
Belarus's picture

The ES trades on EUR/USD and nothing else. Expect many kneejerk moves. Until the ECB prints, there is no allocations that need to be taken. 

Thu, 11/10/2011 - 05:14 | 1865007 Peter K
Peter K's picture

Actually, the EUR/USD trades on the ES. It's cheaper that way:)

Thu, 11/10/2011 - 04:51 | 1864984 TankWolf
TankWolf's picture

Overnight deposits at the ECB dropped by a huge amount approx 180 billion from a few days ago where the fuck has all that cash gone to, I would of only expected that number to stay flat to higher with all the turmoil in Italy yesterday???

Thu, 11/10/2011 - 04:53 | 1864988 ivars
ivars's picture

One more supporting prediction chart for deflation in the USA in end of 2011-beginning of 2012 and all the scenarios that follows:

1) Economy in recession from q1 2012 ( increased cash hoarding=reduction of money velocity main reason)

2) Stocks sharply down, most commodities down

3) Gold, silver stable until more money -MUCH more is pressed in

4) USDx up

Supporting charts

This prediction is valid for up to q4 2012 (with differing details visible in other charts)

Thu, 11/10/2011 - 05:17 | 1865012 qussl3
qussl3's picture

Interesting stuff.

Wonder what the global picture is like.

Does anyone else have the ability to reflate like the FED?

 

Thu, 11/10/2011 - 05:20 | 1865018 Fips_OnTheSpot
Fips_OnTheSpot's picture

@fiatcurrency : Hearing spec of an ECB statement at 12.00 (unconfirmed)

Hm..

Thu, 11/10/2011 - 05:20 | 1865019 Dick Darlington
Dick Darlington's picture

Italian Industrial Production -4,8% MoM, -2,7% YoY (exp. +1,1)

And what does the italian equity market do? Well it goes UP of course. Bad data and sovereign meltdown are traditionally very supportive for equities...

What a joke!

Thu, 11/10/2011 - 05:24 | 1865024 Gief Gold Plox
Gief Gold Plox's picture

I was reluctant dumping more euros into gold untill I saw these numbers. What a joke!

Thanks for posting them. Cheers!

Thu, 11/10/2011 - 05:21 | 1865020 Element
Thu, 11/10/2011 - 05:36 | 1865030 PhattyBuoy
PhattyBuoy's picture

Nice .

Thu, 11/10/2011 - 05:59 | 1865050 Element
Thu, 11/10/2011 - 05:22 | 1865021 Peter K
Peter K's picture

Italian 10 yrs just bottomed out at 7.09%. And that is with a lot of help from the ECB and ComedyNBC:)

The magic number as of last Friday is 27b Euro. This is the amount that, when added to the existing SMP amount in the ECB balance sheet (184B) will equal the amount the the Germans "PLEDGED" to the EFSF (211B max). In other words, if this weeks Italian debt purchases are above 27B, the amount of debt that the ECB will have to offload onto the EFSF is larger than the total German contribution pledged (not actual mind you).

Thu, 11/10/2011 - 05:40 | 1865035 joe.schmuck
joe.schmuck's picture

+1

If the control tool is via fiat, getting around that tool will become fraught with ....

Thu, 11/10/2011 - 05:49 | 1865044 pmcgoohan
pmcgoohan's picture

market talk- EU will commit to buying unlimited amounts of italian bonds after new government installed

Thu, 11/10/2011 - 05:55 | 1865047 Dick Darlington
Dick Darlington's picture

Aaaaand more bullish stuff to support the equity bubble...

EU Cuts 2011 Euro-Area Gdp Growth Forecast to 1.5% From 1.6%

*EU CUTS 2012 EURO-AREA GDP GROWTH FORECAST TO 0.5%

*EU CUTS EURO-AREA 2011 DEFICIT FORECAST TO 4.1%/GDP FROM 4.3%

*EU SEES FRANCE DEBT AT 89.2% IN 2012, 91.7% IN 2013

*EU SEES SPAIN DEBT AT 73.8% OF GDP IN 2012, 78.0% IN 2013

*EU SEES IRELAND DEBT AT 117.5% OF GDP IN 2012, 121.1% IN 2013

*EU SEES PORTUGAL DEBT AT 111.0% OF GDP IN 2012, 112.1% IN 2013

*EU SEES AVERAGE EURO-AREA DEFICIT FALLING TO 3% LIMIT IN 2013

*EU SEES SLOVAKIA DEFICIT AT 5.8% OF GDP IN 2011, 4.9% 2012

*EU SEES SLOVENIA DEFICIT AT 5.7% OF GDP IN 2011, 5.3% 2012

*EU SEES EURO-AREA DEFICIT AT 4.1% OF GDP IN 2011, 3.4% IN 2012

*EU SEES EURO-AREA DEFICIT AT 3.4% OF GDP IN 2012, 3.0% IN 2013

*EU SEES U.K. DEFICIT AT 9.4%/GDP IN 2011, 7.8% 2012, 5.8% 2013

*EU SEES IRISH DEFICIT AT 10.3%/GDP IN 2011,8.6% 2012, 7.8% 2013

*EU SEES SPAIN DEFICIT AT 6.6%/GDP IN 2011, 5.9% 2012, 5.3% 2013

*EU SEES ITALY DEFICIT AT 4%/GDP IN 2011, 2.3% 2012, 1.2% 2013

*EU SEES GREEK DEFICIT AT 8.9% IN 2011, 7.0% IN 2012, 6.8%/2013

*EU SEES GREEK GDP DOWN 5.5% IN 2011, DOWN 2.8% IN 2012

*EU SEES GREEK GDP GROWTH OF 0.7% IN 2013

*EU SEES ITALY GDP GROWTH 0.5% IN 2011, 0.1%/2012, 0.7% IN 2013

Thu, 11/10/2011 - 06:03 | 1865056 Zgangsta
Zgangsta's picture

So that's why Europe is going green now!

Thu, 11/10/2011 - 06:25 | 1865073 valley chick
valley chick's picture

Welcome back my friends to the show that never ends....

Thu, 11/10/2011 - 06:23 | 1865071 Forex Insighters
Forex Insighters's picture

agreed.  Like the info..  

Thu, 11/10/2011 - 06:03 | 1865055 Dick Darlington
Dick Darlington's picture

Nov. 10 (Bloomberg) -- Greece’s unemployment rate in August
jumped to 18.4 percent from 16.5 percent in July, according to
an e-mailed statement from the Athens-based Hellenic Statistical
Authority today.

Thu, 11/10/2011 - 06:10 | 1865060 Yardstick of Ci...
Yardstick of Civilization's picture

Fuck this retarded market.  Technicals broken.  Fundamentals non-existant.  My account is on fumes.  I'm done.  Thank you Skynet.

Thu, 11/10/2011 - 06:11 | 1865062 melanie
melanie's picture

Sad to say but seems the right time to invest in Greek and Italian prostitutes, weapons (of war), gardening materials and suicide prevention call centers...

Thu, 11/10/2011 - 06:24 | 1865072 Forex Insighters
Forex Insighters's picture

OK ok now will someone tell me really euro feels they can bailout Italy.  Listen just sell me your silver.. I am setting up for long term  :)

Thu, 11/10/2011 - 06:34 | 1865079 phungus_mungus
phungus_mungus's picture

You know its actually going to be funny, for a short time... to watch all those who actually think the EU is savable if enough unicorn dust is tossed intot he air... its going to be fun to watch all these idiots once it all begins to come unspooled for the final time.

They will react with complete denial and I think they will still be in denial even after the whole thing has crashed and the dust starts to settle.

It'll be like a Monty Python remake of that HBO Movie To Big To Fail...

 

 

Thu, 11/10/2011 - 06:53 | 1865084 Gief Gold Plox
Gief Gold Plox's picture

I wonder how much money is being dumped into 10 year Italian bonds in order to keep the yield below 7% today. Looks like not enough as it's 6.99819 right now. ...And it's gone. Welcome back 7% (7.00874)

Thu, 11/10/2011 - 07:11 | 1865112 Brooklynnative
Brooklynnative's picture

Damn, Tyler, post something.  I dying for my ZH fix.  Gold Pox, can you please link to 10 year Italian bonds?  Thanks.  Wake up Tyler, wake the fuck up!

Thu, 11/10/2011 - 07:13 | 1865116 magpie
magpie's picture

.

Thu, 11/10/2011 - 07:24 | 1865125 longonSpam
longonSpam's picture

First post, I'm all-in for fight club now that my dream of retiring to the Azores went fucking poof.. I'm sure Cantor added another $2m of shorts on the € to his deuce on T-bills Mon.

Thu, 11/10/2011 - 07:31 | 1865128 Dick Darlington
Thu, 11/10/2011 - 07:36 | 1865134 Brooklynnative
Brooklynnative's picture

May need new investment stratgey.  Staring at screen, screaming "down down down"!!! doesn't seem to be working.  Maybe I should stand up and start jumping up and down?  

Thu, 11/10/2011 - 07:55 | 1865148 falak pema
falak pema's picture

In this roller coaster it is interesting to follow EUR/USD rate; it has maintained its relation at above the historical level; 1.19 USD, ever since the Euro crisis began. It shows us that even as the Italian domino tanks and exposes France and its triple A to imminent sanction, the fear of the markets for an all out move to the USD haven is not on the cards. Not that BB would like a strong USD as it would kill WS even faster!

We are damned on both sides of the pond. As for Euro zone it will have to rapidly shed its PIGS and reconfigure to core, if its not too late already. Only the markets and the Oligarchs know how and at what rate the ponzi will unwind as we move closer to narrow straights between Charybdis and Scylla all the time.

Will Angela Merkel give in to the sirens shrilling for ECB paper printing to infinity and eurobonding?

Time will tell but time is also running out for big game changer moves in Euro zone.

They are all on the Raft of the Medusa by the looks of it.

Do NOT follow this link or you will be banned from the site!