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Risk, Euro Tumbles Under 1.27 On Weak European Data, Continued Flight To Safety
Over the past hour the EURUSD has tumbled by nearly 100 pips on what some believe is a liquidation program, but is largely driven off continued European data weakness (and with the recession here, we will be getting much more of this in the days to come), as well as continued scramble for safety. Germany auctioned off a 5 year note which received €9billion bids for €4billion target; the bund yield 2.3bps was indicative of a safe haven bid, and explains why bank deposits with the ECB rose to a new record €486billion. The strength is somewhat peculiar as it was earlier reported that the German economy contracted by 0.25 bps in Q4, which is never a good thing, but the assessment is that German weakness will hit others more than Germany itself. Elsewhere, Spanish industrial production declined -7.0% Y/y vs an estimated -5.4%, the worst decline since Oct. 2009. Spain 2-year yield down -34bps, causing spread to bunds to fall 33bps. We doubt that this contraction will last, or the BTP yield flirting with the 7% barrier especially after Rabobank finally noted what we have been saying for a while, namely that LCH will soon have to hike Italian margins again. In Greece, CPI rose 2.2% Y/y vs est. 2.7%; a decline which is seen as a symptom of economic downturn. Confirming the slowdown, we learn that Euroarea Q3 economic growth was reduced to 0.1%, meaning that the recession likely started in Q4. Hungary is again a center of attention, after the forint drops following an EU statement it may suspend Hungary funding (unless the country hands over its legislative apparatus to the EU entirely). Finally, we find out that French Fitch is now channeling France, after saying that the ECB must do more to prevent a cataclysmic Euro collapse. All this leads to a drop in the EUR to under 1.27, a slide in crude to under $102, and a decline in gold to $1634 after nearly hitting $1650 in overnight trading as the world realizes that a return in Chinese inflation (that SHCOMP surge isnt coming on its own) courtesy of a loose PBOC, will mean a prompt retrace of the metal's all time highs.
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beware the ides of March
"Friends, Romans, countrymen... lend me Eur-os."
turn on those damn printing presses!!!
Cataclysmic....strong words
Merkel lovin' this... China coming in a close second and the Fed a distant third.
Apocolyptic would be more apt, I think.
well I did say on this site that I saw the 12th as a time to short again, But I admit I didn't quite expect the huge jump on futures and options games being played by the big boys this past two weeks. plus anytime you see that kind of gap overnight you can short. I It's so stupid to see theus markets not sell off on the gap like that. clearly it's the machines running things when that happens. they keep it up, and the sheep who can't follow the market really well get screwed. I always look with suspect when I see this type of action.
the programme is right on shedule.
The course the world is on is just astonishing. Your diagnosed as having lung cancer and decide to up your smoking from 2 to 4 packs a day, and buy the smokes on credit.
Just Europe transfering oil consumption to the States................
Example Ireland
The net imports of all Petroleum products is.
2003 : 8431 KTOE
Peaking in 2005 : 9198 KTOE
2007 : 8960 KTOE
2010 : 7464 KTOE
this is back to 1998 like levels : 7505KTOE
Fuel consumption new diseal cars in 2007 : 6.33 litres / 100km
” ” ” ” ” in 2010 : 5.02 litres / 100km (large extent due to a change in tax policey)
New car sales 2007 : 181,571
2008 : 146,637
2009 : 54,055
2010 : 85,264
2011(oct) : 86,004
US is also decreasing oil consumtion. The increase is coming from Asia.
Ok - is it pegged China then ?
Europe is shrinking so that the others can grow - despite the fact we probally burn less oil for $ GDP.
How does flight to safety go with equities being up every day for two weeks?
PPT, roy.
But EuroArea growth is still 0.1% so a recession is likely!!!!
"a return in Chinese inflation..........courtesy of a loose PBOC, will mean a prompt retrace of the metal's all time highs."
Can someone please expand on this logic?
the new energy source: human power..park the cars, and walk the new era of human progress,,why animals can help too..get those buggy whips or buy shares in the new start up..clean streets co. ..a cart to pick up cow pies on our streets. PS wear high boots. the sweet smell of progress in summer makes the city the place to be ..welcome to the new 1800's.
Euro recession, surely not. Merkel will probably fart a sweet message that will make everything better.
German bonds the safest of the lot if you want to stay in Euros.
Look for good auctions of U.S. bonds as European crisis continues, and lower rates.
Watch those Italian 10 years: http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND
Much over 7% and old Draghi may have his work cut out.
If you don't want a haircut you buy German bonds.
RUMOUR HAS IT:- EURUSD TO PLUNGE TO 1.23 BY THE END OF THIS WEEK. GS WILL BE HAPPY ABOUT THAT!!!!!!
Sell, Mortimer, SELLLLL!
Why just talk about bonds...why is that the ONLY item to buy...why not Iowa Farmland...or gold and silver....why is it only a piece of paper issued by a government that is broke...if interest rates go up just 1%...most governments will be broke...and the investors in these safe havens will have lost money...they cannot have an upside....there is a third rail..and its called gold and silver folks....Fiat or Bonds are not the only choices
GREAT ! ... A bit MORE of that sort .. please ! EUR/USD at about 1.1 would be PERFECT , but is may be too much to hope for !
Could I politely request the Anglosaxon Propaganda Apparatus to be a bit more vigilant .. I think I must write a comment regaring that in The Financial Times and ask this newsmedia to trap up the coverage
You see .. we in Europe really would like to offer our products cheaper to the general american and british populace This might be helpfull to You, the common US and UK consumer . as we have heard also You have fallen upon harder times .. even if .. we in Europe have difficult in believing such malignant rumours .. and considering the greatness of Your Countries and Policies
BUT .. please pay with something else than Dollars or Pounds .. if You dont mind .. is just technical .. but really .. we have so many dollars already and cant really find much use for more ..