Spanish Bond Yields Hit 2012 Highs As Merkel Dismisses Eurobonds

Tyler Durden's picture

Spanish bond yields have leaked slowly higher all day but the very recent news from Merkel, talking on the G-20, that:

  • *MERKEL SAYS WRONG TIME TO DISCUSS POSSIBILITY OF EURO BONDS
  • *MERKEL SAYS STATES MUST GIVE UP SOME SOVEREIGNTY TO EU
  • *MERKEL SAYS JOINT LIABILITIES IN EUROPE REQUIRE JOINT CONTROLS
  • *MERKEL SAYS INVESTORS' INTEREST NOT IDENTICAL WITH EUROPE'S (Subordination?)

has pushed Spanish CDS and bonds to they highest closing levels for the year and just shy of intraday post-EU record wides. For context, these are 15 year high yields at 6.67% and while they 'feel' dramatically high, Spanish bond yields were over 12% in 1995 (but the current spread to Bunds is dramatically wider) highlighting why focusing on the spread not the yield is now critical. 5Y CDS are holding above 600bps again (record wides) and 10Y Spanish spreads (over Bunds) are at 527bps - near all-time (pre- and post-Euro) wides. The last two days have seen a dramatic surge of 38bps from Friday's close and 65bps from Monday's open as Goldman's 'long' short-dated Spanish bond bet continues to Corzine the Muppets.

Spanish 10Y yields at 2012 highs

and longer-term yields are well off record levels...

but this is because Bunds were far higher in yield then as this chart shows, we are at all-time record high spreads for Spanish debt...

Chart: Bloomberg

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lolmao500's picture

Merkel : lying biatch.

If it comes to a vote, they gonna vote to screw the German people.

But Merkel is going for the ``big`` screwing...

  • *MERKEL SAYS STATES MUST GIVE UP SOME SOVEREIGNTY TO EU
  • *MERKEL SAYS JOINT LIABILITIES IN EUROPE REQUIRE JOINT CONTROLS

Aka... the united states of Europe where banksters controlled Germany rules it... and people get angry at Germany, not the banksters.

Hell it worked with WW1 and WW2... so why not WW3??

hedgeless_horseman's picture

 

 

  • MERKEL SAYS STATES MUST GIVE UP SOME* SOVEREIGNTY TO EU

*All your budget, gold, and grandchildren's productivity are belong to us

youngman's picture

This is the KEY....but it will never happen....never....so now the chips will just fall....there is no saving it anymore...its saving your friends and yourself...lots of fiat will be printed and it will all end up in someones pocket at the end....some will be winners or what I would call a thief.....others will lose all of it...what I would call an angry majority.....the winners will fly away with all the goods...

LeBalance's picture

oh baby, you KNOW this is what they are playing for right?  One EU to rule them all.  :)  USofEU

old naughty's picture

Merkel says wrong time to dicuss...

"...Entitlements to support".

GMadScientist's picture

By way of metaphor: do you let the bank holding your car loan tell you how to drive?

 

GubbermintWorker's picture

They do tell you to carry full insurance.

idea_hamster's picture

So the ECB should force member countries to buy CDS on their own debt to cover the notional that they issue in any year that they fail to comply with the Maastrich 3%/60% limits?

In the rear-view mirror, it doesn't seem that crazy -- the problem is that those CDS would likely have been written by domestic banks (who were all AAA+wesome-rated at the time) making the counterparty risk issue paramount.

With car insurance, you can generally be confident that your car accident won't bankrupt the insurance company.  No so with the SovDebt CDS market.

GMadScientist's picture

Shared risk requires a pool with some kind of distribution to wheel over the troublemakers but this ship of fools is too skewed.

 

lolmao500's picture

I mean, you think if there's a political union and a bank union there won't be bailouts from Germany to Greece?? Ah! Hell it'll be like in the US... for example, California ``bailing out`` Alabama... transfer of money...

So if Germans accept this BS to ``solve`` everything, they will give bailouts AND lose their political sovereignty...

So go ahead fools, get in this mess even more than you are now...

AnAnonymous's picture

Aka... the united states of Europe where banksters controlled Germany rules it... and people get angry at Germany, not the banksters.

Hell it worked with WW1 and WW2... so why not WW3??
________________________

It has to be US citizen Merkel. Could not be US citizen Germans. Cant be US citizen middle class, cant be the Germans and it can not doubly be the US citizen german middle class.

And wait for posts to explain that actually Merkel did not state that, but a low rank in her government or stuff like that.

monopoly's picture

Will there ever be a day when the politicians, squids, and govt. hacks ever do something right, for the people. So sad. And gold just moved up 15 dollars, Huh?

HelluvaEngineer's picture

Oh.  Now I understand why futures just jumped.

junkyardjack's picture

HFT tractor beams initiated again?

LouisDega's picture

Tyler has to confirm that. Until then, It's just an illusion man.

Mercury's picture

In other words:

Don't put the cart before the horse. 
Put your liberty (sovereignty) on the table and then we'll talk about security.

At least one country in Europe understands that there's no free lunch here.

t_kAyk's picture

"Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety."  ~ Benjamin Franklin

Mercury's picture

 Indeed, although upon reflection I'd like to qualify my other statement by noting that in the trailing 52wk period Merkel has probably pulled more fancy toothpicks out of catered, artisanal sandwiches than a Muppet in heat.

gnomon's picture

As the crunch intensifies it becomes ever more apparent that the majority in The West care little for Liberty unless it is wrapped in affluence.  And that they will discard Liberty in a nanosecond for just for a plausible promise of unearned affluence.  

In other words, "Give Me Liberty or Give Me Death" is morphing into a confused notion of Social Justice in which the hapless shills think that they will retain some shred of Freedom and Dignity once this pernicious and ultimately Stalinist concept is fully implemented.  

 

 

AnAnonymous's picture

US citizenism has always be about classwarfare, not freedom, truth and justice.

Burgeoning middle class ousting upper class on ground upper class used coercion, lies and injustice.

US citizens has always been about affluency.

Founding fathers did not wish to free their slaves because... money.

Nukular Freedum's picture

No GW freed his personal slaves on his death, against the wishes of his household.

The reason there was not a general emancipation in 1776 was because the founders believed it would be too destabilising of the nascent state. Well, they were right.

old naughty's picture

i wouldn't quote Ben F too often...He may be "speaking" of "a new normal".

And fast forward to today, oh sht.

junkyardjack's picture

That's okay, I'm sure once they announce a bailout of Spain everything will be okay. Oh wait...

LongSoupLine's picture

Cue the various CB "intervention" rumors.

Futures just doubled because...well...uhhh...oh yeah, hope.

GMadScientist's picture

"MERKEL SAYS WRONG TIME TO DISCUSS POSSIBILITY OF EURO BONDS"

Kindly asks that other Zooropa Collective members not skip ahead in the script.

youngman's picture

I would say if I was Merkel....send me your gold.....then and only then we will talk.....period

GMadScientist's picture

If you were Merkel, you'd know you've got a financial sector that will collapse if the EZ goes 'kaput'.


markar's picture

they absorbed E. Germany. They can absorb their financial sector--by printing very expensive DMs.

Mae Kadoodie's picture

What part of "nein" don't you understand?

moriarty's picture

"For context, these are 15 year high yields at 6.67% and while they 'feel' dramatically high, Spanish bond yields were over 12% in 1995".

More context

1995 = "Spanish" yeilds

2012 = "Dogs breakfast" yeilds

 

lolmao500's picture

Except they have more debt, can get a bailout and don't control their economic policy (the ECB does).

So context is important.

moriarty's picture

Fair enough but surely @ 12% they would not have had the property bubble they had and the consequent bust.

Like most here probably agree the PIIGS would not have had a snowballs chance in hell of the party they have had over the last 12 years if it was not for the Euro and we may not be in the depth of shit that we are.

lolmao500's picture

surely @ 12% they would not have had the property bubble they had and the consequent bust.

Indeed. All the fault of the ECB and their free money. All the countries in trouble right now are in trouble because of the ECB.

the not so mighty maximiza's picture
  • *MERKEL SAYS STATES MUST GIVE UP SOME SOVEREIGNTY TO EU
  • AKA, RAISE THE GERMAN FLAG ABOVE YOUR RESPECTIVE CAPITALS

    Al Huxley's picture

    Well, that's what they get for over-borrowing.  Now (as has been pointed out by ZH so many times) it's just a game of chicken between the borrowers and the lender.

    Vince Clortho's picture

    AKA, RAISE THE NEW WORLD ORDER FLAG ABOVE YOUR RESPECTIVE CAPITALS

    lolmao500's picture

    So... what good stock is there to short french bonds?

    monopoly's picture

    I think Ms. Merkel is feeling some pressure from the people. And we thought Italy would not be on our radar for another month or so. Geesh, that took about 24 hours. 

    NEXT! Step right up folks.

    Bunga Bunga's picture

    You guessed it. German taxpayers are already on the hook for 2 trillion in piigs funding. In Germany the social system has been reformed over the last 10 years (unemployed are forced into low wage jobs, retirement age was increased aso), real incomes are down. At the same time other Euro members  lived above their means and now demand even further funding of their welfare systems (or does France make a surplus to fund the reduction of their retirement age to 60 years?) on the back of harworking, productive people. If Merkel agreed to Euro-Bonds, it would be political suicide.

    HelluvaEngineer's picture

    Likely right.  Someone probably wants to sell at a better price.

    Itch's picture

    Gold got a little bit of a lift there, big bit of a lift actually, $15 so far...

    lakecity55's picture

    It's still going up........

    rabbitusvomitus's picture

    ...And the MSM talking heads are frantically avoiding the conversation... move along folks, nothing to see here..... you can't make this shit up!

    WaEver's picture

    Can someone tell mrs Merkel that when the Titanic sank, first class got pretty wet as well

    Quinvarius's picture

    MERKEL SAYS STATES MUST GIVE UP SOME SOVEREIGNTY TO EU

    I can't believe a German actually said that in public.