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Spain And Italy Stocks Surging, Bonds Not So Much (Again)

Tyler Durden's picture





 

What's the opposite of bloodbath? Italian and Spanish stock markets are surging today - after lying S&P-like for a few days - with IBEX up over 2% and FTSEMIB up almost 1.5%, both back up to four-month highs. Now up 9% and 12% respectively since the EU Summit, they appear to be reconnecting with post-EU Summit strength from the rest of core-Europe and breaking resistance at the early July highs. Will this mark the top of the range? Who knows. Swiss 2Y rates are still negative - but well off their lowest levels - but what is most interesting is that on a day when these two nations no-short-selling-allowed equity markets are pushing to multi-month highs, their sovereign bonds (which for all intent and purpose represent the critical fulcrum security in the world) are leaking back higher in yield and not enjoying all that enthusiasm. Just as in the US, equity trading volumes have stagnated in Europe as these markets have levitated and bonds stagnated.

Italy and Spain are resurging (on their own) today...

 

but bonds remain far less excited about this reality...Spain...

 

and Italy...

 

and Spain's inexorable slide in volume (and range-bound existence) is very reminiscent of the US...

 

while the all-important curve in Spain (10Y minus 2Y) has retraced 40% of its bullish steepening bias...

 


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Thu, 08/16/2012 - 09:44 | Link to Comment SeverinSlade
SeverinSlade's picture

It's almost as if equities are being manipulated to the upside...

Thu, 08/16/2012 - 09:55 | Link to Comment malikai
malikai's picture

All is well in Euroland again!

http://www.quantsig.net/img/fx_eurusd.png

Thu, 08/16/2012 - 10:03 | Link to Comment Ethics Gradient
Ethics Gradient's picture

And basking in a golden shower.

(Is that the opposite of a bloodbath? - at least where the move up is unjustified)

Thu, 08/16/2012 - 09:50 | Link to Comment Comay Mierda
Comay Mierda's picture

temporary bottom in spain and italy etfs. smart money is buying for medium term hold. long term doesnt look good

Thu, 08/16/2012 - 09:50 | Link to Comment fonzannoon
fonzannoon's picture

How do you say Knight Capital in Spanish?

Thu, 08/16/2012 - 10:21 | Link to Comment hugovanderbubble
hugovanderbubble's picture

Literally: Capital Caballero,

Real Traslation: Banco Santander Equity Trading Desk.

Thu, 08/16/2012 - 09:51 | Link to Comment asteroids
asteroids's picture

Traders coming back from vacation want one thing. To make a quick profit. I don't think these gains will be large or permanent.

Thu, 08/16/2012 - 11:16 | Link to Comment GoldbugVariation
GoldbugVariation's picture

In the last three months, every time Spain and Italy equities have sold off, there has been a headfake like this just before.  Italy might have one more surge up to 14900 hunting for stops but then I think the big sell off starts on Monday.

OK, make that "one more splurge up to 15000".

Thu, 08/16/2012 - 10:01 | Link to Comment falak pema
falak pema's picture

does this mean Mutti Merkel found herself a latin lover and is now at peace with the three card monty? 

A country that invented Casanova can't be all bad! 

Thu, 08/16/2012 - 10:17 | Link to Comment hugovanderbubble
hugovanderbubble's picture

great work

Simplicity kicks twice-

 

Hedge Spain with PUTS 5000 MARCH 2013

Thu, 08/16/2012 - 12:16 | Link to Comment Dareconomics
Dareconomics's picture

That the Italian and Spanish markets are rising is not a surprise. Short-selling bans appear to help markets rise in the short-term. This makes sense from a technical standpoint. Markets need buyers and sellers to function correctly. Over a long time horizon, buying and selling match up perfectly; however, market dislocations occur all the time over the course of a few seconds, minutes or hours. During these dislocations, investors will take on risk in the hopes of profiting from them.

If there is too much selling...

http://dareconomics.wordpress.com/2012/08/16/short-selling-bans-keep-mar...

Thu, 08/16/2012 - 14:20 | Link to Comment GoldbugVariation
GoldbugVariation's picture

Italy up another 1% after-hours, for anyone who is following this.  Now at 15090.

Do NOT follow this link or you will be banned from the site!