Overnight Sentiment: Europe Threatens Market Surreality Again

Tyler Durden's picture

It is a quiet session so far with risk in the Off position (for now - we have yet to see the sinusoid HFT stop triggering function which rises stocks artificially as yesterday demonstrated so very well to nobody's surprise). All eyes are once again focusing to Europe, pushing the EURUSD lower for at least a few more hours until Europe closes and the repatriation resumes.  In terms of key European events, today is the EU finance minister’s conference call on Spain today. As DB summarizes, officials are expected to approve the EU100 billion Spanish bank rescue plan however the exact size of the loan will probably only be determined in September pending the result of a bank-by-bank stress test. This will then pave way for restructuring plans for the sector in October which is broadly consistent with the timeline set out in the leaked draft MoU. At the previous meeting finance ministers agreed to first disburse EU30bn to Spain by the end of July so we will watch out for further confirmation of this today. We may also get the terms of the loan today. The conference call is expected to start at 10am GMT. What is odd is that unlike before when the mere possibility of a European catalyst was enough to push risk higher, this is no longer the case, and Spanish spreads to Bunds just hit another all time wide, with the Spanish 10 Year plunging to 7.11%, another post-summit high, this time dragging the Italian 10 Year which was at 6.10% at last check. And as explained before, the European uber pair trade means that as PIIGS yields soar, the core drops to new record, in most cases, negative nominal lows.

Will the world once again be able to ignore the once-again imploding European reality (and American: Of the 35 S&P 500 firms that reported results yesterday, about 74% of those came ahead of market consensus but only 57% of those topped sales forecasts.), and send the ES to a green close on the day? Or is today the day when reality comes back with a vengeance? Stay tuned and find out.

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firstdivision's picture

ITA10 is over 7, SPA10 is back above 6, and WTI is well above $90....defo QE-off day.  No way will anything be close to announced with WTI at these levels, so DXY it is.

nasdaq99's picture

here's a daily blog on the euro debt crisis. also go to elmundo.es and look at the pictures:


Ghordius's picture

Oh, how I love this "Europe threatens..." this and that... it reminds me that should we "fix" (another stupid meme) europe, then... oh, what then?

slaughterer's picture

Then we just GOT to "fix" the US of A. 

slaughterer's picture

RoboGoldHater strikes again.  How are your CMG shares looking this morning?  Think CMG margins will remain positive with the spike in corn prices?

Need More Cowbell's picture

Wake me up when the Spanish 10Y yield hits 7.5% - that should get this party started.

dcb's picture

I love the site, but the excess crap when you write stuff is so distrurbing. the algo go to a spot, usually, just do sso, we hit the exact top trend line yesterday, and a two week high in the euro. all you need to do is the charts weekly. Now it is very bearish for banks because we didn't hit new weekly highs, the same with emerging market, or the vgk. this weeks high was lower than last weeks, suggesting we have hikt a market top for those, although it is not confirmed at this time.

you can anlmost have one good chart and because of correlation just trade that, s and p usually best.

overmedicatedundersexed's picture


Alexmai : hey germany. we got your money, your bmw's & benzes and now you think you can threaten us..we quit the EU you get nothing back not one euro. viva Iceland..LOL