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Italy And Spain 'Steady' At Pre-Draghi Sell-Off Levels As Front-End Softens

Tyler Durden's picture





 

In spite of all the exuberance of front-running the ebullient print/buy response of a dysphoric request for help (that may never come - just like QE3 if market levels remains elevated), Spanish and Italian 10Y bond spreads are only now just making it back to pre-Draghi 'let-down' press-conference levels - and holding steady. The basis (the spread between CDS and bond spreads) has compressed dramatically as bonds have outperformed with the 'hope' of a substantial SMP enabling an illiquid bond market to remove whatever event risk (PSI/haircut/subordination) premium was priced in cash and not CDS. The front-end of the Spanish and Italian curves is softening modestly 7-10bps (though admittedly off compressed levels) but with Spain and Italy stock markets up 12 and 9% from Thursday close respectively - and well above pre-Draghi levels (even as German and Swiss rates stumble along the bottom on a safety bid) it seems whatever volume there is (which is tepid at best) is marginally lifting the unshortable irrepressible equity market (which is outperforming credit markets notably now).

10Y Italy and Spain reverted back to pre-Draghi disappointment speech levels but holding steady...

 

as the basis compresses (bonds outperform to meet CDS' more ebullient view of things)...

 

but stocks continue their relentless rise...

 

especially compared to European credit and financials...

 

Charts: Bloomberg

 


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Tue, 08/07/2012 - 08:37 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

OK....we've got it steady....noboby move!

 

Tue, 08/07/2012 - 08:39 | Link to Comment Jlmadyson
Jlmadyson's picture

Pretty much frozen yesterday outside one fake twitter rumor and the final seconds of trade.

Tue, 08/07/2012 - 08:42 | Link to Comment merizobeach
merizobeach's picture

Ah-choo!  Oh, no, the house of cards..!

Tue, 08/07/2012 - 08:55 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Waiter.....please give him the check.

 

Tue, 08/07/2012 - 10:18 | Link to Comment merizobeach
merizobeach's picture

No problem, I'll just put that on my Citi Rewards Card...

Tue, 08/07/2012 - 09:13 | Link to Comment Hype Alert
Hype Alert's picture

Once again, hot air rises.

Tue, 08/07/2012 - 08:39 | Link to Comment Snakeeyes
Snakeeyes's picture

After today's economic news from Germany and Italy, SOMETHING will happen.

You can almost feel Bernanke hitting the CTRL P ...

 

http://confoundedinterest.wordpress.com/2012/08/07/italy-and-germany-report-bad-economic-news-more-central-bank-intervention/

Tue, 08/07/2012 - 08:43 | Link to Comment Bogdog
Bogdog's picture

Awesome run-on sentance of factoids. I'm impressed.

The king's english is strong with this one.

Crash it bitchez.

Tue, 08/07/2012 - 08:44 | Link to Comment RobotTrader
RobotTrader's picture

This has been a nightmare for the bears the last 3 years.

 

The careers of so many "acclaimed experts" ruined.

As Bob Brinker says:

"Never Before Have So Many Been So Wrong For So Long"

Tue, 08/07/2012 - 08:49 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Clearly Bob Brinker has not consulted me.

 

Tue, 08/07/2012 - 08:52 | Link to Comment ThunderingTurd
ThunderingTurd's picture

I think the common misconception is that 'bears' are only short stocks.  If one becomes 'bearish' on equities, there is no doubt that they would have an allocation to negative equity exposure; but to assume that their investment thesis is 'wrong' is simply small minded.  Bearish investors might have a heavy allocation to long-term T bonds...how has that done over the last three years?  Bearish investors might have a heavy allocation to muni bonds...how has that done over the last three years?  Bearish investors might have a heavy allocation to gold...how has that done over the last three years?  Bearish investors might have a heavy allocation to high yield over equities...how has that done over the last three years?  I have become tired of 'pure' equity players saying that you can't make money if you aren't in stocks.  The 'stock' market is broke and I will continue to lose money on my shorts and coin money on my other assets...both physical and paper.

 

TT

Tue, 08/07/2012 - 09:16 | Link to Comment scatterbrains
scatterbrains's picture

A true bear sits and waits (be right sit tight) on the river bank for the momo-tard fishies to come to him. Just when the little tards leap to victory the bear snatches them out of the air and rips their little fucking heads off.

Tue, 08/07/2012 - 09:35 | Link to Comment disabledvet
disabledvet's picture

Selective shorting...especially in the entirety of the Social Media space has been a BONANZA! It's only a matter of time before "it" spills over to the media space in general. Standing opposed to the over all bearish sentiment however is the confluence of the dollar still bein the world's reserve currency and the US Government's "Project Mayhem" way of dealing with this status. "Filling the breach" of that boondoggle are mega-cap corporations who by doing right by the bottom line "win by default." simple for me to say "don't short the whole MARKET" as a consequence since "in the absence of a responsible authority the Fed will find one."

Tue, 08/07/2012 - 08:55 | Link to Comment bnbdnb
bnbdnb's picture

Eh? Italy/Spain/Greece/Ireland/EUR are not bearish and havent been for the last year?

Tue, 08/07/2012 - 09:05 | Link to Comment malikai
malikai's picture

"Never Before Have So Many Witnessed So Much Bullshit For So Long"

Tue, 08/07/2012 - 09:06 | Link to Comment ThunderingTurd
ThunderingTurd's picture

Well said!!

Tue, 08/07/2012 - 09:30 | Link to Comment fuu
fuu's picture

<golf clap>

Tue, 08/07/2012 - 08:44 | Link to Comment The Axe
The Axe's picture

Its August  another beautiful summer in Europe....lie all summer, then lie all fall...markets (equity) are a year highs..guess its working!!!

Tue, 08/07/2012 - 08:55 | Link to Comment Neethgie
Neethgie's picture

world economy is playing pass the parcel with an atom bomb, everyone in the cirlce knows its going to go off, yet none have the strength of will to dismantle it fearing they may lose an eyebrow or 2 on the way

Tue, 08/07/2012 - 09:21 | Link to Comment Meesohaawnee
Meesohaawnee's picture

wow. robo. i used to be a huge bob brinker fan. He lost me years when he yearned for oil markets to trade like markets.. then knew he was an old timer who lost touch with reality. Good dude though.

Tue, 08/07/2012 - 09:35 | Link to Comment john_connor
john_connor's picture

Let the bubble blow until the inevitable catastrophic end.

Tue, 08/07/2012 - 09:37 | Link to Comment disabledvet
disabledvet's picture

German economy will not collapse. All the others either already have or are about to. "Holy Roman Empire" redux...which was anything but I might add.

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