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The Overnight pEURonoia Is Back - Previewing This Week's Extensive European Bond Auctions
European bond markets appear poised on the edge of the latest precipice as economic data this morning has confirmed once again that all the ECB's $1.3 trillion liquidity injection did was mask the underlying solvency issues for less than 4 months. Net result: more liquidity injections imminent (and with $2.5 trillion in asset sales and deleveraging still pending, we should probably bold and underling more). Yet what some are forgetting is that European banks would want nothing more than getting Spanish bonds back to 7.50%, the bogey which JPM defined as the level at which the NEW LTRO will be unleashed, standards of living be damned. The junkies need their fix and will do anything to get it, even crashing sovereign bond markets in the process. They may get their wish sooner than most expect: after all, this week is chock full of bond auctions in the core and periphery, where just one failure will make every forced buyer into a forced seller, as creative destruction will be the only thing to force the ECB's hand into injecting another several hundred billion in stock steroids, now that the Fed is still in its pre-presidential election quiet period.
Marc Ostwald of Monument, via Bloomberg, summarizes the pitfalls in the next 168 hours:
- Italian auctions this week will require ‘hefty concessions’ while the new 30-yr bund auction will need substantial foreign demand given its unappetitizing yield, Marc Ostwald, strategist at Monument Securities, writes in note.
- Cites weekend collapse in Netherlands budget talks, highly inconclusive first round of French presidential elections and sluggish PMIs out of China
- French election results highlight an extension of the Balkanization of western Europe and deep-seated disenhancement with modern politicians
- A grand coalition of CDU and SPD is high probability in Germany’s 2013 federal elections which would push the euro zone closer to complete disintegration; increasingly unbridgeable gap between German and French visions of the region
- Italy’s auctions of bills, 2-yr CTZ/BTPei and BTP/CCTs this wk will require hefty concession
- New 30-yr bund auction will need substantial foreign demand to be successful as there is little natural/structural demand domestically while current 30-yr yield of 2.38% is wholly unappetitizing
And visually:
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Mmmmm.......Euro bonds! How many you got for sell?
collapse is on!
Or Mario Draghi and Ben Bernanke on the phone arranging a new swap line to buy bonds
Or Mario Draghi and Ben Bernanke on the phone arranging a new swap line to buy bonds
Or Mario Draghi and Ben Bernanke on the phone (via Goldman conference call) arranging a new swap line to buy bonds.
(added important detail.)
Christine Lagarde may need to break out that big, brown purse again.
Just a relapse until the next fake cash injection. Remember that the big boys make good money when volatility is at its highest.
When the hell is the Bundesbank going to come out and say enough? Any time now.....
I'm stuffed with the 3000% yield greek bonds...I can't buy any more of these....sorry.
SOCIAL UNREST IN EUROPE IS COMING BACK AND IT WILL START IN MADRID SPAIN WHICH OVER TIME WILL LEAD TO POTENTIAL CIVIL WARS AMONG DIFFERENT EUROPEAN NATIONS....
You're in charge Ted.....just handle it.
Ted,
You need to buy a new keyboard since you can't seem to fix that 'Caps Lock' issue.
OT - Hussman mentions ZH in his weekly market comment.
It"s William Banzai's fault... his funny pictures attackt even the biggest morons... but I don't think he read the articles.
1.3 trillion for 4 months....
AND WHAT DO I GET FOR 12 MONTHS?! CUT ME A DEAL HERE BRO! I'LL GIVE YOU SPAIN AND GREECE ON A PLATTER!
The heroin demands are gonna come faster , and they ate going to need bigger injections.
So Yurp is 'bad' again now.
I am not a Ron Paul guy but he is on CNBC this morning and they don't know what to do with him. It is like he is speaking a foreign language to them.
That's because the only thing they understand is fiat good , gold bad. They can't grasp the fact that more debt isn't going to cure a debt problem. In their linear thinking the only thing that will solve the problem is growth.
Ill bet quite a few of the people at CNBC and MSLSD own physical, they will never admit it.
Yea right...maybe a watch and earrings
You use the term "creative destruction" as if you have no concept of what it means.
I don't think it should be called pEUronoia. I think it should be just straight pnEUmonia.