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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chump666's picture

whilst watching the DAX heading towards 2% neg

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?

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 

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.


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

Mark Wilson's picture

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

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.

Mark Wilson's picture

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

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!

Mark Wilson's picture

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

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?

qussl3's picture

Deus Ex Machina by lunch.

Rip your face off time.

Peter K's picture

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

SixFeetFromTheHedge's picture

Italy 10 yr note at 7.159%

Is Draghi suddenly now the most powerful man in Europe?

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.

chump666's picture

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

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."

Mark Wilson's picture

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

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!

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.

Irish66's picture

Markets are gonna get halted at this rate

navy62802's picture

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

Irish66's picture

look at the italian 10 year, link above

navy62802's picture

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

hondamikesd's picture

Thought the same thing until I googled the yield!

Zodiac's picture

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

Zodiac's picture

Black Rot still finds BTPs "attractive", right?

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?

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.

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

XitSam's picture

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

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.

rgilliam37's picture

You hit right on the bullseye!!

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

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

youngman's picture

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

Treason Season's picture

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



Schmuck Raker's picture

MBA to the rescue...TA DAH!

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."

Blank Reg's picture

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