Overnight Sentiment Improves Modestly, If Not Greek 1 Year Bonds Which Slide To Record 1114%

Tyler Durden's picture


Following yesterday's broad risk off day, some positive sentiment has returned to markets despite ugly economic data from Germany, and an odd indefinite halt of trading of Greek bonds on the Milan Borse. As BAC notes, for the third straight day, Asian equity markets sold off, as investors are concerned about a Greece debt-swap deal. The regional MSCI Asia Pacific Index slid 0.9%, to finish at its lowest close in a month. The worst-performing market was the cyclical-sensitive Korean Kospi. Its economy, along with many other emerging Asia economies, is highly dependent on exports, so yesterday's data that showed that the Euro area's economy contracted in the fourth quarter added to the bad news. The Hang Seng also lost 0.9%, while the Shanghai Composite fell 0.7%. Japan's Nikkei lost 0.6% and the Indian Sensex fell 0.2%. In Europe, equities are rebounding from their biggest drop since November. Part of the rebound is investors returning to equities to buy the dip, while investors are also expecting a strong ADP employment report later in the day - at 8:15 am. In the aggregate, European equities are up 0.4%. At home, futures are pointing to a solid opening later today. The S&P 500 is set to open 0.5% higher. Elsewhere, German factory orders plunged -2.7% M/M on expectations, from a +1.6% December print, driven by a total collapse in orders from outside the Eurozone which imploded by 8.6% down from +12.1% in December (more shortly). And Europe is now bracing for a Greek default as the Milan Bourse earlier announced it has suspended Greek bonds from trading indefinitely - perhaps related to this is the fact that after trading in the triple digits yesterday, the Greek 1 Year just slid to an all time record 1114% - looks like there is not much value in that post-reorg Greek package offered to PSI volunteers. Finally, the deposit money held at the ECB barely budges, as it prints at €817 billion, down just modestly from yesterday's record print as Europe's banks brace for Thursday's PSI announcement with a big cash buffer.

Some more on market performance this morning via BAC:

  • Yields are backing up in the sovereign debt market, as investor's regain their risk appetite. In the US, the 10-year Treasury yield is 2bp higher, at 1.96%, while the long bond is 3bp higher, at 3.10%. In Europe, the UK gilt is 1bp higher, at 2.12%, and the German bond is trading at 1.79%, after rising 1bp. Meanwhile, peripheral debt is benefiting from the risk-on trade. Italy's 10-year note is 8bp lower, at 4.96%, and the Spanish 10-year is 4bp lower, at 5.06%.
  • In the currency markets, the dollar is weaker, with the DXY index down 0.1%. WTI crude oil is 57 cents higher, at $105.29 a barrel. Gold is higher as well, up $5.85 an ounce, at $1,680.18.
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Wed, 03/07/2012 - 08:18 | 2231577 TooBearish
TooBearish's picture

I can't help myself - but who the fuk is selling them Greek bonds down here???

Wed, 03/07/2012 - 19:15 | 2234008 StychoKiller
StychoKiller's picture

Everybody limbo!  (Sorry, it's the best clip I could find :>D)

Wed, 03/07/2012 - 08:22 | 2231581 PhilB
PhilB's picture

The headline is misleading. Greek bond prices havent changed at all in past couple of weeks. AS everyone with a bit of bond math would know, the yield on these bonds willl keep going up right until the swap date since the price stays the same but the days to maturity are decreasing. There is no mkt value change in these bonds. It just looks nice as a bear headline...wish ZH would stop such nonsense tactics, its starting to look like CNBC.

Wed, 03/07/2012 - 08:25 | 2231586 TooBearish
TooBearish's picture

thanks - its hard to believe that any trading at all is occuring at these levels...

Wed, 03/07/2012 - 08:46 | 2231602 labestiol
labestiol's picture

So price stays the same (no one buying/selling), but yield will go to infinity seconds before the swap ?

Wed, 03/07/2012 - 08:49 | 2231605 Tyler Durden
Tyler Durden's picture

Good try... But 100% incorrect, because anyone who knows "even a bit of bond math", knows that since the bonds mature in one year (as the title says, 1 YEAR maturity, not March 20 maturity), or just over at 8/20/2013, there is a price change.

Also, since anyone with a "bit of bond math knowledge" has a Bloomberg, they can check this for themselves in 3 seconds. Others, such as yourself, can look at the chart below and see the actual downtick in the cash bond.

Or maybe a 21 to 19 intraday cents of par swing (10% of total) is meaningless in your book?

Wed, 03/07/2012 - 08:59 | 2231618 silver500
silver500's picture

Ok you beat me to it, it is that 4.1% coupon bond that matures in August 2012 influencing the high GGGB1YR yield of 1102%



Wed, 03/07/2012 - 09:54 | 2231749 PhilB
PhilB's picture

Ok Tyler..i bite....you have BBG ...show the volume traded! Look at the bid offer spread. 18 to22...come on. that is 4 intra day bid offer versus your 2 you use to show an alleged price move..NO VOLUME!

Wed, 03/07/2012 - 11:40 | 2232172 Burnbright
Burnbright's picture

What exactly is your point? Did you miss econ101 or did you not realize that when no one wants to buy your shit it means it is worthless. 

Really? WTF is your point?

Wed, 03/07/2012 - 11:57 | 2232239 PhilB
PhilB's picture

My point BurnDim, is that the headline is meaningless, there is no mkt information being communicated. ZH is great (and i think it really allows people to ccomment otherwise my comments would have been deleted, so hats off to the forum), but ZH has a huge tendency to overstate meaningless bearish headlines, in case you havent noticed. I appreciated getting the other picture, but i think ZH should avoid succumbing to same sensationalism we see in media.

Is that too hard for you to understand?

Wed, 03/07/2012 - 12:09 | 2232281 Burnbright
Burnbright's picture

I agree hyperbole doesn't help anyone, however you said that their weren't many bids, so what. If their wasn't anything being offered that would be a different story. That's all I am saying. I don't know how to read the chart the way you do, so please explain in more detail. Because simply saying that few offers are being made does not improve your arguement.

Wed, 03/07/2012 - 10:00 | 2231769 PhilB
PhilB's picture

I guess you have one of the EuroBank books where you can mark to make believe no volume mid price noise. The gentleman was wondering who was trading down here...and the answer..is no one,..there is no trading..and there is only a ridiculous price noise based on a wide bid offer spread. Now...how relevant is your headline?

Wed, 03/07/2012 - 10:37 | 2231906 silver500
silver500's picture

Maybe the Headline should say:

Bid Yield 1102% Ask Yield 690%

Wed, 03/07/2012 - 08:54 | 2231611 silver500
silver500's picture





People are still trading the bond and the images show how bloomberg is calculating the yield, based on the 4.1% bullet bond and the bids.

Wed, 03/07/2012 - 12:01 | 2232270 PhilB
PhilB's picture

Sorry, no one is trading the bonds. NO ONE. As you can see from your own screen they are quoting a very very wide mkt, with absolutely no volume..in fact your quotes show 12 pts bid offer spreads...worse than the BBG mkt estimator. There is No Trading.

Wed, 03/07/2012 - 12:07 | 2232303 Burnbright
Burnbright's picture

So are their no offers, bids, or is the market closed? Cause saying their is no trading can mean several different things, it is rather ambigous. 

Wed, 03/07/2012 - 12:14 | 2232335 PhilB
PhilB's picture

It means there is not trading...not that there is not market making (providing a bid and an offer). But the point is that the bid and offer are so wide, that its a useless mkt to reference for any sort of price moves. No trading, means just that, no bonds are changing hands at a cleared price. Cant be any clearer than that. Lets say you have a BMW X5 you want to sell, and you offer to sell yours for 1MM USD and some one offers you 1 dollar for it. Kind of useless isnt it? No one would trade..and so they dont.

In fact, as you mentioned, there are markets now officially closed in trading these bonds and more too follow very shortly.

Wed, 03/07/2012 - 12:26 | 2232402 Burnbright
Burnbright's picture

Thank you for the explination

Wed, 03/07/2012 - 08:24 | 2231584 TradingJoe
TradingJoe's picture

I guess today is another attempt to sell at a somewhat higher level, in expectation of Thursday's "default"?! Cannot help thinking that the corruptos will be able to come up with yet another "fix" even if just "transitory" and thus "help" the "market" for another day! We've seen it before, no reason for a non repeat!

"Bulls" in their maniac attempt to "front run" the FEDsters, cannot get in their heads that there won't be ANY QEx at these levels!

Something's gotta give!

Wed, 03/07/2012 - 08:29 | 2231589 stopcpdotcom
stopcpdotcom's picture

Oh bugger! 1114%. What a swizz! When I bought some of those a few weeks ago you only got 700%. I've been diddled.

Wed, 03/07/2012 - 08:29 | 2231591 LongSoupLine
LongSoupLine's picture

I, for one, will be fading any ramps at this point.  The trend has changed...well, at least until the next Heidelberg printer frenzy or uber-rumor.

Wed, 03/07/2012 - 08:41 | 2231598 labestiol
labestiol's picture

Sorry for being a newb, but can someone explain me how much of a loss people selling here are taking ? And if someone also have some idea about who is selling

Wed, 03/07/2012 - 09:14 | 2231636 Seditious Blasphemer
Seditious Blasphemer's picture

Never apologise for being newb.

In fact Im about to join you.

Newb question here, but I am curious.... If one was to purchase a Greek Bond that matures in a year at 1114%, does that mean when it matures I get 1114% of what I initially paid for it?

Is that what Greek bonds selling at 1114% means?

Wed, 03/07/2012 - 09:26 | 2231659 Dumpster Fire
Dumpster Fire's picture

What could possibly go wrong?  :)

Wed, 03/07/2012 - 09:32 | 2231675 rufusbird
rufusbird's picture

Stop and think a minute about what your asking. Their is a difference between what would happen if the bonds paid off as originally underwritten, ( that is where the 1114% number comes from)and what is likely to happen. Just pencil it out, and you will get your answers.

Wed, 03/07/2012 - 09:48 | 2231726 Seditious Blasphemer
Seditious Blasphemer's picture

Trying to pencil it out, feels like Im repeatesly slamming my head against a brick wall.

So its on the backs of the Greek people to pay the 1114% return on said bonds by the Greek citizenry paying taxes and suffering under "austerity" measures?

Aaaaaaannnnnnddd, if one buys said bond at 1114%, and Greece defaults, the bond holders get nothing, zero, nadda, right?

What fucking kind of horror show is this? Who, in their right or at the very least semi-right mind would buy into such a blatant lose-lose situation?

Unless Im missing something here?

Wed, 03/07/2012 - 10:33 | 2231880 Central Bankster
Central Bankster's picture

Here I will make it simple for you.  Pretend Greece sold a bond today for 100, paying no interest, and matures in one year for 100 (IE you get your money back in one year is the bond "promise").  Then imagine tomorrow everyone gets scared and believes they won't get paid their 100 back.  They proceed to sell the bonds for 50 in the market.  This would give someone the opportunity to collect a 100% "yield" if they bought that day AND Greece paid its bondholders at 100 like originally promised.


So here is the situation, with a 1114% yield, we can be confident the Greeks will NOT pay their bondholders in full-  IE they will default.  The higher the yield goes the bigger the default is believed to be by market participants.

Wed, 03/07/2012 - 08:42 | 2231599 disabledvet
disabledvet's picture

As they various member states go from Storming the Bastille to Storming the ECB the following was heard "blasting" from the "formerly staid institution":

Wed, 03/07/2012 - 08:53 | 2231610 Olympia
Olympia's picture

Loan sharks knew that if they took the dollars printing machines under their control they could suffocate the world ...they could initially suffocate USA and after taking the USA from the Americans, they could move and suffocate the whole world and take the countries from their people.

FED printed cheap money and loansharking multiplied this money in an unnatural way within the American economy boarders and they discarded them abroad so that they did not threaten USA. USA became the first state in the world with artificial “breathing”...

It cannot be possible but just in the USA for only the last year, more than one million houses were seized. It cannot be impossible but the New World has returned to tents and shelters ..has returned to the ages of Columbus. It cannot be possible that we allow to a few loan sharks looting the toils and the assets of people...




Wed, 03/07/2012 - 09:09 | 2231630 Gunga
Gunga's picture

"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -- Thomas Jefferson -- The Debate Over The Recharter Of The Bank Bill, (1809)

Wed, 03/07/2012 - 10:37 | 2231903 Resolute
Wed, 03/07/2012 - 11:46 | 2232205 Gunga
Gunga's picture

 The way things are going, in another 100 years , there will internet sites that say the entire Bill of Rights was a bogus quote.

Wed, 03/07/2012 - 13:42 | 2232724 Resolute
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Do NOT follow this link or you will be banned from the site!