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Market Stalls As LCH Announces Margin Hikes On Italian Debt

Tyler Durden's picture


According the note below from the LCH website, deposit charges on Italian bonds will almost double effective close today (Wednesday November 9th). The details can be found here.



LCH Raises Deposit Charge on 10-Yr Bonds to 11.65% From 6.65%

Initial reaction is -5pts in ES and 35pips in EURUSD (breaking back below 1.38).



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Wed, 11/09/2011 - 03:24 | 1859813 slewie the pi-rat
slewie the pi-rat's picture

margin hikes are soooo risk-0ff, BiCheZ!

Wed, 11/09/2011 - 03:31 | 1859819 phyuckyiu
phyuckyiu's picture


Wed, 11/09/2011 - 03:35 | 1859823 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Hike gold margins, c'mon, bitchez!  It won't be like we haven't seen that before.

Physical, biatchez!

Wed, 11/09/2011 - 05:11 | 1859894 French Frog
French Frog's picture

How about this scenario: the ECB buys enough Italian Bonds today so that the basket of yields' level/spread used to determine whether a margin hikes HAS to take place is not enacted: that should be enough to kick the can down the road for another day or maybe until at least the weekend.

Could they?

Wed, 11/09/2011 - 03:32 | 1859821 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fiat Ponzi is sooo risk off,,,, bitcheZ!

So is gold, you know that though.

Wed, 11/09/2011 - 07:42 | 1860016 BandGap
BandGap's picture

You want fries with that?


Wed, 11/09/2011 - 03:31 | 1859818 YesWeKahn
YesWeKahn's picture

Bernanke has the solution: print.

Wed, 11/09/2011 - 03:32 | 1859820 qussl3
qussl3's picture

Crude above 95 and Brent 115 says not anytime soon.

Wed, 11/09/2011 - 03:37 | 1859824 The Shootist
The Shootist's picture

Seemingly. Stagflation anyone?

Wed, 11/09/2011 - 03:48 | 1859836 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yeah, sort of, but stagflation istoo 70's.  This is worse.  We need new terms.  As of now, this is more than one word.  This is the Greatest Depression meets inflation meets deflation meets woops!  Sorry!  You bought into the Fiat Ponzi!

Wed, 11/09/2011 - 04:09 | 1859854 Non Passaran
Non Passaran's picture

Hyperstagflation, some call it.

Wed, 11/09/2011 - 04:25 | 1859868 JLee2027
JLee2027's picture

Toilet bowl swirl.

Wed, 11/09/2011 - 04:34 | 1859875 css1971
css1971's picture

It's just a simple rebalancing of the economy.


From paper delusions to physical reality.


Wed, 11/09/2011 - 08:55 | 1860223 Seer
Seer's picture

Fiat Ponzi is a poster child for the paradigm of perpetual growth on a finite planet.

Yes, it's going to be bad.  As I've been stating, economies of scale in reverse is going to be a harsh experience.  Here's how this kind of thing looks:

How do they keep from closing down?  Raise prices?  That'll further smack down demand!  There's no way out of this.

Wed, 11/09/2011 - 03:56 | 1859840 qussl3
qussl3's picture


Wed, 11/09/2011 - 03:39 | 1859830 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yeah good thing Bernanke is raising rates, so to quell speculation.  I mean, you know, no QE, right?  He is just keeping rates at 0%, that's all!  He wants a strong dollar.  He wrote about it.  "A strong dollar will raise exports, bla bla bla!"  Bernanke, an econonomic genious, ivy league scholar, smartest man of this world!

Wed, 11/09/2011 - 05:08 | 1859892 NewThor
NewThor's picture


can raise unicorns 

in 15 minutes.


Wed, 11/09/2011 - 03:42 | 1859833 Dick Darlington
Dick Darlington's picture


In panic, kill democracy (TM)

Wed, 11/09/2011 - 03:50 | 1859841 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Democracy didn't work with abundant oil.  Maybe it will work when people have to walk to work.  Let's spin the wheel and find out.

Wed, 11/09/2011 - 05:05 | 1859890 NewThor
NewThor's picture

You can spin a wheel without oil.

so there is that


Wed, 11/09/2011 - 06:29 | 1859939 JesusUp
JesusUp's picture

yeah, like hydrogen may work , even


Wed, 11/09/2011 - 05:48 | 1859914 Dick Darlington
Dick Darlington's picture

And some more from the delusional dictator:

 Nov. 9 (Bloomberg) -- German Chancellor Angela Merkel said
the referendum plans announced in Greece last week during the
Group of 20 summmit in Cannes showed that domestic policies in
any one country impact the entire euro region.
     “What we got in Cannes was the feeling that there is no
such thing any more as domestic policy making,” Merkel was
cited as saying in an interview with Deutsche Presse-Agentur
published today in English. “Domestic is what’s inside the
currency area. Greece can no longer decide all by itself the
issue of whether it should hold a referendum or not.”
     The decision in Greece, which was subsequently overturned,
“had ramifications for all of us because the dependability of
decisions taken by the 17 was suddenly endangered,” Merkel was
cited as saying. “All the other 16 were just as affected by
this referendum decision.”

Wed, 11/09/2011 - 07:30 | 1860002 Schmuck Raker
Schmuck Raker's picture

"Greece can no longer decide all by itself the
issue of whether it should hold a referendum or not."


"We're All Greeks Now."


Wed, 11/09/2011 - 04:00 | 1859850 LikeClockwork
LikeClockwork's picture

Someone break it down for me nice and gentle. How should this play out for the coupon/yield within the next couple of days?

Wed, 11/09/2011 - 04:19 | 1859860 slewie the pi-rat
slewie the pi-rat's picture


ok.  i'll try

  • IF we ass-u-me that raising margins tends to dampen speculation = risk-0ff
  • THEN money tends to got into Treasurys = yield declines
Wed, 11/09/2011 - 04:25 | 1859869 LikeClockwork
LikeClockwork's picture

I see yield has pulled back slightly. For now.

Wed, 11/09/2011 - 06:44 | 1859959 Arius
Arius's picture

edit ?

Wed, 11/09/2011 - 04:22 | 1859861 slewie the pi-rat
slewie the pi-rat's picture

but in riskier bonds, hy-yield & junk,

then those yields might go up

Wed, 11/09/2011 - 04:12 | 1859855 Blank Reg
Blank Reg's picture

And I saw, and behold a white horse: and he that sat upon it is called Schiff:  And a bow of silver; and a crown of gold was given unto him. And he thus spake: By these signs shall I go forth, conquering and to conquer.

~ Book of Revaluations

Wed, 11/09/2011 - 07:30 | 1860003 Gene8696
Gene8696's picture

And I stood upon the sand of the sea, and saw a beast rise up out of the sea, having seven heads and ten horns, and upon his horns ten crowns, and upon his heads the name of blasphemy... the euro.

Wed, 11/09/2011 - 07:33 | 1860007 Schmuck Raker
Schmuck Raker's picture



Wed, 11/09/2011 - 08:01 | 1860012 Blank Reg
Blank Reg's picture

spake [speyk]  vb

Archaic or dialect; a past tense of speak. (Geeze, crack a book sometime)

Fri, 11/11/2011 - 20:46 | 1871339 Schmuck Raker
Schmuck Raker's picture

I'm well aware of the definition of 'Spake'.

I gave you a +1 cuz I like the fact you used it.

'Behold' also usually brings a smile to my face.

And, 'Nigh' is da bomb!

Wed, 11/09/2011 - 04:14 | 1859858 lolmao500
lolmao500's picture

So every french bank is about to blow up... NICE.

Wed, 11/09/2011 - 04:24 | 1859865 JLee2027
JLee2027's picture

Yeah yeah. They always get right to the brink and then it reverses. Watch the Italian 10 year do the same thing. How amazing.

Wed, 11/09/2011 - 04:28 | 1859871 HD
HD's picture

Sadly, I have become just as jaded. Reality doesn't seem to matter. Fundamentals certainly don't matter. Lies, spin and hopium - now they matter.

Wed, 11/09/2011 - 04:29 | 1859872 Peter K
Peter K's picture

We need a positive EUR/USD rumor, and fast:)

Wed, 11/09/2011 - 05:01 | 1859885 slaughterer
slaughterer's picture

The will come up with another positive EUR/USD rumor by 3 pm.  They always do, don't they? 

Wed, 11/09/2011 - 05:01 | 1859887 Brooklynnative
Brooklynnative's picture

Does Tyler never sleep or are there more than one writers using that name?  

Wed, 11/09/2011 - 05:10 | 1859893 UK debt marsh
UK debt marsh's picture

There are a bunch of smart little tylers behind the curtain

Wed, 11/09/2011 - 06:06 | 1859922 HD
HD's picture

BLASPHEMY! There is only the one and true Tyler. Non-believer will be cast into the hell fires of CNBC - where they will forever tormented by "the Cramer"...a fate worse than death to be sure.

REPENT now and save yourself! The truth shall set you free.

Wed, 11/09/2011 - 06:11 | 1859924 NewThor
NewThor's picture

Some chick told me Tyler is Putin.

Chicks are crazy.

Wed, 11/09/2011 - 06:19 | 1859928 HD
HD's picture

I apologize in advance...

  I guess she was..."Putin" you on!

    And again, I apologize.

Wed, 11/09/2011 - 06:53 | 1859964 Arius
Arius's picture

ZH has offices in Switzerland and london, therefore, there is someone else being paid to update the site .... just a guess there is only one tyler per se, but several employees ...

Wed, 11/09/2011 - 05:13 | 1859895 Cassandra Syndrome
Cassandra Syndrome's picture

Italian Bond Yield Inverts. The yields are exploding as we speak.

Wed, 11/09/2011 - 05:23 | 1859902 Flounder
Flounder's picture

Just saw BTP at 6.903%.  Intervention coming?

Wed, 11/09/2011 - 05:26 | 1859905 Cassandra Syndrome
Cassandra Syndrome's picture

6.97%. About to hit 7%. Complete panic sell off this morning.

Wed, 11/09/2011 - 05:17 | 1859897 chump666
chump666's picture

wow Italian 10yr just went into orbit.  german bund/italian bond spread = default +CDS wipeout. 

Wed, 11/09/2011 - 05:28 | 1859906 hondamikesd
hondamikesd's picture

F5'ing Bloomberg ITA 10 yr watching yield tick up at every click... the wheels are falling right the fuck off.

Wed, 11/09/2011 - 06:25 | 1859934 chump666
chump666's picture

whilst watching the DAX heading towards 2% neg

Wed, 11/09/2011 - 06:31 | 1859941 hondamikesd
hondamikesd's picture

DAX futures -4.1%, the only question is have they finally taken the red pill or do they stick save this bullshit yet again?

Wed, 11/09/2011 - 06:46 | 1859962 chump666
chump666's picture

this is pretty serious.  greece was and still is nothing except the greedy banks and others holding greek debt/cds...that was the risk aversion trade.  the greek leaders slap austerity act like monkeys and somehow con the markets for a little bit.  italy has cut straight to the bone, so far no austerity, Silvio calling the EU bluff and the markets with his socalled resignation.  meanwhile the bond yield goes to default ranges.  this will 100% will stress frances CDS spreads and most likely spains and portugals.  a bigger economy like italy looking like it will very, very bad.  the ECB will come in soon, but...what can they do?  Italy's bonds are being dumped on mass.

i'd be watching the HFT's on this, could get messy on major short pos 

Wed, 11/09/2011 - 05:48 | 1859899 magpie
Wed, 11/09/2011 - 05:34 | 1859907 you enjoy myself
you enjoy myself's picture

Initial reaction is -5pts in ES and 35pips in EURUSD (breaking back below 1.38)

err, isn't that only to ensure a min of 20+ from europe close to nyse close?  i'm not sure what i'd make of the market if it didn't gap down 10 and then finish up 10+.  it just wouldn't make sense otherwise.


Wed, 11/09/2011 - 05:44 | 1859912 Dick Darlington
Dick Darlington's picture

Italy 2s10s INVERTED

 Nov. 9 (Bloomberg) -- Italy’s two-year notes slid, pushing
the yield on the securities above the rate on 10-year bonds.
     The two-year note yield was at 7.04 percent at 9:31 a.m.
London time, exceeding the 6.97 percent rate on the 10-year

Wed, 11/09/2011 - 05:58 | 1859917 Mark Wilson
Mark Wilson's picture

Wow. My unsecured BAC credit card is only 11%.

Wed, 11/09/2011 - 06:10 | 1859923 Quintus
Quintus's picture

BTPs now trading north of 7% yield.


If the ECB is planning to do any rescue printing, now would be a good time to begin.

Wed, 11/09/2011 - 06:14 | 1859925 KlausK
KlausK's picture



Wed, 11/09/2011 - 06:15 | 1859926 Mark Wilson
Mark Wilson's picture

Yeah no kidding. I'm trying to think of a headline that will reverse this tank in futures.  

Wed, 11/09/2011 - 06:20 | 1859929 hondamikesd
hondamikesd's picture

A plan to plan a plan is being formulated in order to talk about nonspecific details regarding leveraging up some fictional alphabet soup miracle of a financial alchemical expirement that will surely save us all! SPX futures up 100 pts. on the news!

Wed, 11/09/2011 - 06:24 | 1859932 Mark Wilson
Mark Wilson's picture

That seems to be all it takes lately. Jeez, what a mess.

Wed, 11/09/2011 - 06:21 | 1859931 Quintus
Quintus's picture

7.14% now.  At this rate of ascent, we'll be at 9% by the end of the day.

Surely the ECB will intervene?  Right?

Wed, 11/09/2011 - 06:32 | 1859946 qussl3
qussl3's picture

Deus Ex Machina by lunch.

Rip your face off time.

Wed, 11/09/2011 - 06:38 | 1859954 Peter K
Peter K's picture

Does anyone out there remember the "convergence play"? Well, we are witnessing un-convergence.... in one day:)

Wed, 11/09/2011 - 06:20 | 1859930 SixFeetFromTheHedge
SixFeetFromTheHedge's picture

Italy 10 yr note at 7.159%

Is Draghi suddenly now the most powerful man in Europe?

Wed, 11/09/2011 - 07:11 | 1859983 slaughterer
slaughterer's picture

7.409% right now.  It just keeps on getting worse and worse.  Somebody call Liesman.   Italy needs a rumor to save it.

Wed, 11/09/2011 - 06:31 | 1859942 chump666
chump666's picture

at 7% + the ECB can't do anything.  i think we are witnessing the 1st major EZ default.  

Wed, 11/09/2011 - 06:32 | 1859945 Brooklynnative
Brooklynnative's picture

Gotta love what's going on in Greece.  The politicians are fighting not for cabinet positions but to keep from getting a cabinet position and the blame that will come with it.

"In the through-the-looking-glass world of Greek politics, the argument was not over who could claim the cabinet positions, but who could avoid taking them, particularly the Finance Ministry."

Wed, 11/09/2011 - 06:32 | 1859947 Mark Wilson
Mark Wilson's picture

Some dude on CNBC just recommended...wait for it...PRINT!

Wed, 11/09/2011 - 06:41 | 1859957 Non Passaran
Non Passaran's picture

Yield over 7+% now, US futures nosediving, YES!!!!

I got badly burned shorting last few days but I still have 1/3 of those positions open, today could be payback day!

Wed, 11/09/2011 - 06:52 | 1859966 Global Hunter
Global Hunter's picture

bunch of bloody amateurs, they need to rasie the margin on gold and silver and LOWER the margin on Italian bonds.  These wankers can't run a ponzi to save themselves.

Wed, 11/09/2011 - 06:54 | 1859968 Irish66
Irish66's picture

Markets are gonna get halted at this rate

Wed, 11/09/2011 - 06:56 | 1859969 navy62802
navy62802's picture

Um wtf is driving futures down 185 points?? Is there some news that I haven't seen yet?

Wed, 11/09/2011 - 06:57 | 1859971 Irish66
Irish66's picture

look at the italian 10 year, link above

Wed, 11/09/2011 - 06:58 | 1859973 navy62802
navy62802's picture

Touche .... I spoke too soon!! Now I see.

Wed, 11/09/2011 - 07:03 | 1859976 hondamikesd
hondamikesd's picture

Thought the same thing until I googled the yield!

Wed, 11/09/2011 - 06:58 | 1859972 Zodiac
Zodiac's picture

Risk off today.  Where is the frog that has been pounding the table about price stabeeleeteee?

Wed, 11/09/2011 - 07:02 | 1859975 Zodiac
Zodiac's picture

Black Rot still finds BTPs "attractive", right?

Wed, 11/09/2011 - 07:07 | 1859978 Zodiac
Zodiac's picture

Wait a second, didn't Morgue Stanley tell us these Italian sausages are illiquid and don't trade?  Why then does LCH need to raise margin requirements?

Wed, 11/09/2011 - 07:13 | 1859986 ivars
ivars's picture

Deflation-inlation-deflation will actually change places in the USA periodically starting from q4 2011:

First from inflation to deflation q42011-q32012, than into inflation q4 2012- q2 2013, than deflation again q32013-q4 2013 inflation q1 2014 etc ..before the final firm move into inflation in q1 2015.

Wed, 11/09/2011 - 07:19 | 1859993 prains
prains's picture

Reflation anyone?

Wed, 11/09/2011 - 08:05 | 1860044 Schmuck Raker
Schmuck Raker's picture

Defecation Q4'11 - Q4'31

Wed, 11/09/2011 - 07:15 | 1859987 Irish66
Irish66's picture

5 year 7.7

Wed, 11/09/2011 - 07:27 | 1859998 Dick Darlington
Dick Darlington's picture

We don't need no stinkin' austerity!

     Nov. 9 (Bloomberg) -- Italy’s government has yet to write
the austerity legislation that must be passed by Parliament
before Prime Minister Silvio Berlusconi resigns, said  Mario
Baldassarri, head of the Senate Finance Committee.
     Last week, the amendment containing the proposed measures
“was supposed to arrive Thursday” and then “it was supposed
to arrive Friday,” Baldassarri, who left the premier’s party
last year to join the opposition, said in an interview today in
Rome. “Monday, they let us know they would wait for the vote in
the Chamber of Deputies” yesterday.
     The Senate Budget Committee suspended a session scheduled
today to examine the legislation and may reconvene later.
Spokesmen for Berlusconi’s office and for Finance Minister
Giulio Tremonti declined to comment on the status of the text.
     After losing a routine budget vote in the house yesterday,
Berlusconi offered to resign as soon as Parliament approves the
legislation, which the government says will contain some of the
austerity and economic-growth steps pledged to the European
Union and the European Central Bank. The measures are to be partof a “maxi-amendment” to be voted on in the Senate next week
and the lower house afterwards.
     “The most serious problem is they haven’t even been able
to write the maxi-amendment because they can’t agree on anything
among themselves,” Baldassarri said. “If they write the word
‘pensions,’ the government will fall. If they write the words
‘labor market’ or ‘liberalization,’ the government will fall.”
     Italian bonds slumped today, driving the five-year note
yield to more than 7 percent for the first time since the euro
was started in 1999. The extra yield  investors demand to hold
10-year Italian debt instead of similar-maturity benchmark
German bunds surged 66 basis points to 5.62 percentage points at
11:45 a.m. in Rome following Berlusconi’s offer to resign

Wed, 11/09/2011 - 07:28 | 1860000 XitSam
XitSam's picture

Are you telling me I can't naked short PIIGS bellies?

Wed, 11/09/2011 - 07:38 | 1860010 Fazzie
Fazzie's picture

 Now all those billions poured into Greeces black hole of debt have done exactly what?  Ironically enough, it appears to have simply hastened the implosion of the EZ via moral hazard and made a bad situation much worse.

 I still remember watching CNBS a year or so ago when Greece had proven all their usual gang of crooks completely wrong. Unfazed, they then started a new line of crap about how Italy was no Greece, not even close, and Spain was hardly even a pig at all, just a couple small reforms away from prosperity.

 ZH OTOH was spot on.

 Now for all we know the ol 3 pm stick save prevails again, maybe, but I think a lot of folks are going to be shocked one day staring at their monitors for the stck save that never comes.

 Print? Sure, nothing like 5 dollar gas and 10 dollar milk to help the barely breathing consumer go on a spending spree.That leaves plan B. Wait, just kidding of course, printing and financial odfuscation are all they know.

 The rock and the hard place are a little closer this morning.

Wed, 11/09/2011 - 07:42 | 1860015 rgilliam37
rgilliam37's picture

You hit right on the bullseye!!

Politicians (extend & pretend) make pond scum look good!!!!

Wed, 11/09/2011 - 07:48 | 1860020 Blank Reg
Blank Reg's picture

And I heard a voice in the midst of the four beasts, And I looked and behold: a pale horse. And his name, that sat on him, was DEBT. And Hell followed with him.

~ Book of Revaluation

Wed, 11/09/2011 - 08:03 | 1860040 youngman
youngman's picture

the European markets are tanking too....down 4%......but gold and silver are a market we live in

Wed, 11/09/2011 - 08:29 | 1860126 Treason Season
Treason Season's picture

Down in U.S. fiat but up in Euros, Reals. Oz $, HK $, CHF etc. : )



Wed, 11/09/2011 - 08:08 | 1860049 Schmuck Raker
Schmuck Raker's picture

MBA to the rescue...TA DAH!

Wed, 11/09/2011 - 08:24 | 1860105 Treason Season
Treason Season's picture


Somebody help me out here. Below is an excerpt from the WSJ and the logic is illusive to me. Does it mean what I think it means, that an Italian default is considered so catastrophic that it is not being considered?

"...A failure by Italy to honor its debts on time is currently considered a remote prospect, precisely because its impact on Europe's banking system and other government bond markets would be so disastrous, economists say."

Thu, 11/10/2011 - 04:48 | 1864980 Blank Reg
Blank Reg's picture

Yup. Time to bury your head in the sand everybody.

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