Sovereigns At One-Month Tights Ahead Of Capital-Raise-Plan and Debt-Swap Deadline

Tyler Durden's picture


The rolling euphoria continues. European sovereigns have performed well again today with a significant surge into the close (helped earlier by ECB buying and optically successful auctions). Italian 10Y is trading back at 450bps over Bunds (one-month tights) and European banks ripped higher in equity and credit markets (as belief in capital raising plans takes hold). As we noted earlier, GGBs have been underperforming all week but equities and credit seem unstoppable here. USDJPY has crumbled in the last hour or so (around the same time as sovereign spreads started to accelerate their compression) and Treasuries (and Bunds) are very significantly underperforming (with the former now 13bps higher in 30Y for the week). While the dollar continues to weaken (and EUR strengthen back over 1.29) commodities are 'oddly' rolling over with Copper, Oil, Gold, and Silver all well off their earlier highs as Europe closes.

Stocks and credit are moving from the lower left to the upper right...enough said. The compression in subordinated financial credit is perhaps the most impressive but we remind those momentum chasers that liquidity does not fix solvency and these are 5Y maturity deals (i.e. post the LTRO roll date).

European sovereign spreads (Portugal not shown but compressed today on ECB buying) have been a little mixed on the week - very different to the financials and broad credit markets. BTPs of course have outperformed - now at one-month tights - (and as pivot security perhaps the risk rally makes sense) but between EFSF and Belgium, spreads are within 5-10bps of their close last week.

EURUSD continues to squeeze against the 'Stolper' trade, now back above 1.29 and at two-week highs. But broadly, the majors are stronger against the USD (except the notable exception in JPY which is much more volatile than its recent historical moves would imply).


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Thu, 01/19/2012 - 12:56 | 2078202 BaBaBouy
BaBaBouy's picture

EURO Crap ...

Thu, 01/19/2012 - 13:09 | 2078246 BaBaBouy
BaBaBouy's picture

EURO Update From Captain Shitelllo ...

Looks like all top 3 Ship Officers fell into the lifeboat at the same time, what a coincidence, Hehehehehehehe!!!


Pressed by magistrates on why he had apparently abandoned the stricken ship, he reportedly said: “I was trying to get people to get into the boats in an orderly fashion. Suddenly, since the ship was at a 60 to 70 degree angle, I tripped and I ended up in one of the boats. That’s how I found myself there.”

He said he got stuck in the lifeboat for an hour before it was lowered into the water off the coast of Giglio island.

A short time afterwards he was seen ashore, leaving an estimated 300 crew and passengers, including children and elderly and disabled people, to fend for themselves. Also with him in the lifeboat was Dimitri Christidis, the Greek second-in-command of the Concordia and Silvia Coronica, the third officer, according to Italian reports.

Mr Schettino told investigators he took the cruise liner to within 0.28 nautical miles of Giglio to perform a “salute” to a former Costa Cruises captain named Mario Palombo.

Thu, 01/19/2012 - 13:49 | 2078442 slewie the pi-rat
slewie the pi-rat's picture

now i can't stop thinking "rub-a-dub-dub"


Mr Schettino told investigators he took the cruise liner to within 0.28 nautical miles of Giglio to perform a “salute” to a former Costa Cruises captain named Mario Palombo.

...not that there's anything wrong with that...

Thu, 01/19/2012 - 12:59 | 2078220 vote_libertaria...
vote_libertarian_party's picture

So no more bailouts???


Everything is fixed.


buy buy buy

Thu, 01/19/2012 - 13:00 | 2078222 HarryM
HarryM's picture

Like fake tits - they're real enough for me

Thu, 01/19/2012 - 13:12 | 2078262 LawsofPhysics
LawsofPhysics's picture

Awesome.  Yeah, the efforts to control the markets are getting a bit more coordinated aren't they.

Thu, 01/19/2012 - 14:41 | 2078654 john39
john39's picture

sown onto a guy?

Thu, 01/19/2012 - 13:14 | 2078270 Caviar Emptor
Caviar Emptor's picture

On the contrary: 4 bailouts announced this week alone! 

-IMF reloading funds to the tune of up to $1 trillion. ECB doing ongoing LTRO and reverse repos, plus considering caping peripheral bond yields. China added liquidity to interbank money markets this week. US debt ceiling breached again, more spending on the way. US to bail out a million mortgages with principle write downs.  

We got a small tsunami of money printing going on quietly this time (PR Dept working overtime)

Thu, 01/19/2012 - 13:40 | 2078406 slewie the pi-rat
slewie the pi-rat's picture

rolling in euphoria, BiCheZ!

Thu, 01/19/2012 - 13:04 | 2078228 SmoothCoolSmoke
SmoothCoolSmoke's picture

Lying.  Soon it will be a major at all the best business and government schools.

Thu, 01/19/2012 - 13:08 | 2078248 kralizec
kralizec's picture

Hey, it's worked for JournoTard, PoliSciTard & Shyster schools for what the hell?!

Thu, 01/19/2012 - 13:43 | 2078422 slewie the pi-rat
slewie the pi-rat's picture

i never tell the truth


Thu, 01/19/2012 - 13:04 | 2078232 Spitzer
Spitzer's picture


Global warming and its connection to elitist Keynesian politics.

Thu, 01/19/2012 - 13:04 | 2078234 Snakeeyes
Snakeeyes's picture

There really wasn't all that much change in yields (Portugal up, Greece down)/ And look at ECB's Liquidity Reserve Requirments!

Thu, 01/19/2012 - 13:04 | 2078235 Snakeeyes
Snakeeyes's picture

There really wasn't all that much change in yields (Portugal up, Greece down)/ And look at ECB's Liquidity Reserve Requirments!

Thu, 01/19/2012 - 13:06 | 2078238 Cognitive Dissonance
Cognitive Dissonance's picture

".........commodities are 'oddly' rolling over with Copper, Oil, Gold, and Silver all well off their earlier highs as Europe closes."

Nothing "odd" about this. Can't have Gold, Silver etc doing well at this point in the market pump. It would send mixed signals since a rising PM price might signal rising fear. The market pump is designed to do the exact opposite, meaning the market rise lowers the underlying fear that the market is pricing in insanity.

Everything is A-OK folks. See, the stock market is up. That means all is well in the the bowels of the ship(s) of state. 

Thu, 01/19/2012 - 13:12 | 2078261 disabledvet
disabledvet's picture

Yes. Policies that knowingly and with intent create a Depression are insane. Treasuries will obliterate every trade being concocted "Over There" if the euro/NY folks turn out to have only discovered "we have bailouts just like 2008."

Thu, 01/19/2012 - 13:07 | 2078244 disabledvet
disabledvet's picture

The difference between getting an economy to grow and getting your money supply to grow is like comparing our Sun to "Imaginary Planet Peon." Uncle Gorilla rates are so low the last thing I would is take his banana away. Instead Wall Street and Europe are "jumping in the cage" cuz "Gorillas are cute and cuddly and we want to kick this onein the balls to see what happens."

Thu, 01/19/2012 - 13:14 | 2078266 LawsofPhysics
LawsofPhysics's picture

"Money" is irrelevant, what is your purchasing power?

Thu, 01/19/2012 - 13:07 | 2078252 HD
HD's picture

Does anyone in their right mind believe after a three year money printing orgy, a 250 point S&P run up, with the world slowing and entire countries defaulting - that we will just continue to climb to the heavens?

Didn't this happen in July before the bottom fell out?

Thu, 01/19/2012 - 13:14 | 2078269 slaughterer
slaughterer's picture

Three bull catalysts:

1.) LTRO 2.0 --a comin' in Feb. amount between Eu1t  and Eu10t.

2.)  QE3--rumored to be a comin'

3.) the S&P 500 multiples spin ("stocks are cheap" Faber)

Bear catalysts:

(on media blackout until after AAPL earnings)


Thu, 01/19/2012 - 13:18 | 2078289 Everybodys All ...
Everybodys All American's picture

There is so much money pushed into the system right now that anything is possible. Count me as amazed that the markets have been able to ignore fundamentals altogether. Someone said it earler that you can go broke thinking the public is smarter than they really are.

What worries me is the amount of inflation that will eventually result.

Thu, 01/19/2012 - 13:36 | 2078389 LawsofPhysics
LawsofPhysics's picture

ALL "flation" related theories are useless as it is a bullshit eCONomic term.

Purchasing power is all that will matter, and you may be surprised as to what people will accept for "money".

Thu, 01/19/2012 - 13:43 | 2078418 Ghordius
Ghordius's picture

LOL, dead on! And, between us, nuts are excellent money substitutes, as cotton, rice, olive oil, wine, etc...

Thu, 01/19/2012 - 13:31 | 2078367 Caviar Emptor
Caviar Emptor's picture

Today's Biflation news: 

Moeny printing mini-tsunami as IMF, ECB, PBOC and US Treasury all engage in loose money operations, bazooka re-loads and dovish talk. IMF wants $1 trillion. ECB bailing banks and sovereigns simultaneuosly with renewed vigor through LTRO and rumors of capping bond yields. PBOC just dumped liquidity into interbank system "pre-holiday". US debt ceiling breached and next target is the sky. And a million mortgage principle write downs are about to be approved with money printed to compensate banks. 

Meanwhile back on earth in the real economy, Philly Fed flounders, new housing starts are in the cellar, PPI printed negative and CPI is at 0, Baltic Dry is nearing all-time lows, CHina GDP is at 2009 levels, and Eurozone is going into recession. All with crude over $100


Thu, 01/19/2012 - 13:43 | 2078419 HD
HD's picture

Which makes me again ask...whats the point? Even if you get another 200 S&P points - it doesn't create any jobs, produce any growth or fix anything. I'm not even sure it will delay anything that much longer.

Thu, 01/19/2012 - 14:09 | 2078513 Caviar Emptor
Caviar Emptor's picture

The point is this: the cronies live to party another day

Thu, 01/19/2012 - 14:19 | 2078562 HD
HD's picture

Agreed - but they'll live even longer if they created a few jobs - real investment.

Thu, 01/19/2012 - 14:15 | 2078545 Arkaenun
Arkaenun's picture

You sure know how to crap on a parade.

Thu, 01/19/2012 - 14:41 | 2078652 SheepDog-One
SheepDog-One's picture

But all is WELL for TODAY! All the squiggley lines prove it! Yeay!!

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