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Some Context On Europe's Sovereign Rally This Morning

Tyler Durden's picture





 

As panties are being thrown at the feet of Mario Draghi all around Europe, and his comments are being heralded as 'confirmation' of Nowotny's restatement of absolutely nothing yesterday, we thought some context would be useful before we all cheer that all is well. Spanish and Italian 10Y bond spreads are still notably wider than the pre-EU-Summit 'panic' levels and dramatically wider than the post-EU-Summit best levels. Spain 2s10s, having flattened from 220bps to 60bps in a week has squeezed back up to 128bps as we can only imagine the bath-salting that caused a few people. The point is that this kneejerk reaction in an incredibly illiquid market at the front-end of the Spanish curve is nothing to rest your hat on yet. In fact, if there are more hints dropped of ECB restarting SMP then we suspect European asset managers will run to sell down their Spanish bonds to try and front-run the subordination this implies at the inevitable restructuring (as game-theoretically they know everyone else will also do the same).

Spain and Italy spreads remain well above Summit levels

and Spain 2s10s has steepened but is well off recent exuberance...

as we gently remind readers that Spanish 2Y yields are still 5.75% - as high as they were in November at the peak of the crisis.

and while Italy's FTSE MIB is +4.5%, it is only back at Friday's close - which looks to us like a gap-fill push...

Charts: Bloomberg

 


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Thu, 07/26/2012 - 09:30 | Link to Comment ThunderingTurd
ThunderingTurd's picture

It is time for the David Einhorn "Boom and Bust" wheel picture.  Please...I need to see it now.

Thu, 07/26/2012 - 09:32 | Link to Comment Stoploss
Stoploss's picture

Oh well, were running out of people to fire in the states, next up, cops and firefighters.

County clerks always safe..

Thu, 07/26/2012 - 09:48 | Link to Comment covert
Thu, 07/26/2012 - 09:37 | Link to Comment CvlDobd
CvlDobd's picture

Dats like today make me want to move Groundhogs Day up to "Greatest Movie of All Time!"

Why won't this market just die!!!! So annoying.

Thu, 07/26/2012 - 11:23 | Link to Comment MillionDollarBoner_
MillionDollarBoner_'s picture

This market is like an eel.

You hit it on the head...ten minutes later its off down the beach

You run after it and hit it again...ten minutes later its off down the beach

You run after it, cut its head off and stuff it in a plastic bag...ten minutes later its off down the beach

(honestly - they do this :O)

Thu, 07/26/2012 - 09:37 | Link to Comment Inthemix96
Inthemix96's picture

Time for my two cents then?

My context on Europes soveriegn rally this morning is this:-

Fucking first class A, manipulated bollocks.  Hope that cleared that up like.

Thu, 07/26/2012 - 09:40 | Link to Comment khakuda
khakuda's picture

All this, plus the Fed to print more!  Who would have guessed?  We're saved!!!

If it's not already, at some point, it's going to become evident even to the least financially savvy and the markets, that the game is over.  Four years of the same moves over and over and all these announcements are doing is proving definitively that there is no real solution.

Thu, 07/26/2012 - 09:40 | Link to Comment RiverRoad
RiverRoad's picture

Thank goodness for the bond market.  A wonderful example of the fact that you can't fool all of the people all of the time with ridiculous comments from Draghi et al.

Thu, 07/26/2012 - 10:09 | Link to Comment CVfriendship
CVfriendship's picture

Funny how the holding period of investments reveals a more-trustworthy valuation. ::cough:: HFT in equities, holding period minimums.  Toxic Volume.

Thu, 07/26/2012 - 09:43 | Link to Comment Snakeeyes
Thu, 07/26/2012 - 09:47 | Link to Comment GMadScientist
GMadScientist's picture

"As panties are being thrown at the feet of Mario Draghi all around Europe"

Collateral standards I can "get behind".

Thu, 07/26/2012 - 09:52 | Link to Comment piliage
piliage's picture
  • stand directly behind empty can
  • kick can in a forward direction
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  • CLIFF FUUUUUUUUUUCCCCCCKKKKKK!!!!!!!!!!!!
Thu, 07/26/2012 - 10:03 | Link to Comment TPTB_r_TBTF
TPTB_r_TBTF's picture
  • ...
  • CLIFF
  • kick can
  • climb down!
  • walk to can
  • kick can
  • walk to can
  • kick can
  • ...

 

 

 

Thu, 07/26/2012 - 09:53 | Link to Comment Yen Cross
Yen Cross's picture

 Who needs to print money, when you can put a "European Meat Puppet" , on a podium and move the markets 2-5% depending on which part of the world you are in! gbp/usd moved 250 pips over night! That was on a 5 min chart with virtually no retrace! This mind you from a country with a negative GDP!  What a f..king farce!  Nowotny & Draghi did  their BS tapebomb handywork really well! /sarc

 They a couple of idiot ass holes! That is why no one wants to participate in the markets!

Thu, 07/26/2012 - 10:14 | Link to Comment marcusfenix
marcusfenix's picture

that's not piss raining down on you right now...it's little drops of sunshine.

are people really this stupid, or is this pure skynet doing it's thing?

the problem here is things have gotten so far out of touch with any semblance of reality, so far off the edge of the map, that there is no way back. no central bank decree, no political policy, no economic theory, nothing will fix this now. there is only economic gravity, unfortunately the artificial highs the central planners and manipulators have achieved and maintained over the last few years via their genetically modified economy (GME) and their voodoo media propaganda have just assured the crash back down will be something the world has never seen before. 

It appears that the mindless killing machine from the future hit it tap dead center when asked about human behavior...

"it's in your nature to destroy yourselves"   

and damn, don't the PTB's just seem determined to prove him right?

Thu, 07/26/2012 - 10:44 | Link to Comment TrustWho
TrustWho's picture

Somebody with access to the data should calculate the impact on global market cap from Mario Draghi's statement. How can one person in a free market system have so much impact? I bet it was approaching $1 trillion.

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