Spanish, Italian Bonds Continue Sliding As Risk Sees Modest Squeeze

Tyler Durden's picture


Following yesterday's blistering market fall, the dead cat is in play, if only for a few hours like on Monday morning, precipitated by some aggressive short covering in the EURUSD, which will continue to be the primary buffer of every fall courtesy of the record number of net shorts, who cover on even the tiniest bit of pseudo-favorable news, no matter how ludicrous. As Bloomberg recaps, European markets gain led by telcos, utilities. Financials trade slightly higher having dropped earlier. Italian shares underperform. The euro reversed earlier losses against the dollar to trade stronger. Commodities fall led by natural gas, the GSCI index is off intraday lows. But the biggest data continues to be the action in Spanish, and now Italian, which everyone is watching very closely, bonds. As the charts below show, subordination is bad, bad thing, and one the Spandora's Box is opened, it can't be closed: both are substantially wider on the day, and the only potential buying catalyst would be for the ECB to come back into the market after 3 months of absence.

Spain 10 Year:

Italy 10 Year:

We expect the dead cat to rediscover gravity once Wall Street opens those Spanish and Italian CDS screens first thing this morning.

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Tue, 06/12/2012 - 07:06 | 2517256 valley chick
valley chick's picture

Spanish and Italian CDS's !! :)

Tue, 06/12/2012 - 07:48 | 2517319 phungus_mungus
phungus_mungus's picture

Folks shoveling Spanish and Italian paper out the door as fast as they can...

Tue, 06/12/2012 - 07:09 | 2517260 tocointhephrase
tocointhephrase's picture

Can you feel it, can you feel it, CAN YOU FEEL IT? Michael Jackson.

Tue, 06/12/2012 - 07:10 | 2517262 dingoj
dingoj's picture

Volatility killed the cat.

Tue, 06/12/2012 - 07:12 | 2517263 LeBalance
LeBalance's picture

yes, Spandora's box was a very, very bad thing to open.  It is only the first such box to open, well maybe just another in the line of "i could not have foreseen them doing that!" set of circumstances.

Lusitania, Liberty, Libya, Drones, Aliens, Zombies, 911, Oklahoma City, French Revolution, the very fiber and silvery screen showing this Hollyweed reality is their plaything.  But it is only their plaything because they have clients who are tempted into being their client.  Much as GS only has clients for exactly that same reason.

So is it a question of ending the "evil" of GS?  Or is it a quetion of ending the need for Greed?  Or it is acceptance of humankind as he/she is?

Tue, 06/12/2012 - 07:11 | 2517264 lewy14
lewy14's picture

The short hair domestic feline whom I serve has asked that we select a new metaphor.

Tue, 06/12/2012 - 07:13 | 2517268 Silverhog
Silverhog's picture

We need another dead cat. This one smells and has no head.

Tue, 06/12/2012 - 07:35 | 2517292 Sudden Debt
Tue, 06/12/2012 - 07:15 | 2517271 Auburn
Auburn's picture

U.S. Treasury sells $32 billion in 3-year notes at 1:00 today - do we see the selling of equities this morning as everyone rushes to safety ahead of the weekend?  Volatility / Schizophrenia  

Tue, 06/12/2012 - 09:00 | 2517502 bnbdnb
bnbdnb's picture

Nah, the Fed will just outbid everyone.

Tue, 06/12/2012 - 07:16 | 2517274 blindman
blindman's picture
No **** -- More Debt Doesn't Work?
"..The people responsible for this scam over the last four years -- each and every single one of them -- deserve to be held to account. Every single pension manager, every single Treasury official, every single House and Senate member along with nearly all of their staffers and both recent Presidents should be rotting in a Federal Prison right now on federal fraud charges.

Every one of them, along with all their so-called "advisors" who failed to get out in front of this, who failed to speak, who failed to stand up in front of a camera and speak to the truth.

All of them." c.d.

Tue, 06/12/2012 - 07:16 | 2517275 lolmao500
lolmao500's picture

And you ain't see nothing once Syriza win the election on Sunday in Greece and tell the EU to stuff their deal up their butt...

Monday next week shall be epic...

Tue, 06/12/2012 - 07:18 | 2517279 ciscokid
ciscokid's picture

I shot the Sherife 

Tue, 06/12/2012 - 07:18 | 2517280 Alejandrito
Alejandrito's picture

Greece, Portugal, Ireland, Spain, Italy,...........FRANCE.

Tue, 06/12/2012 - 07:24 | 2517283 Thamesford
Thamesford's picture

The fleece in Greece was like constipated geese

The pain in Spain is anything but plain,

but critcally in Italy it's about to get more shitily

France may dance but they have no chance

Help from a German is as likely as a Merman


The cult of the acronym spells the end ad hominem

The EC may B, but it's anything but EZ

The EU smells pue, what can the IMF do?

If LTRO was the way to go,

why need a FROB to do the job?


Money, you see, makes things expensive as can be

The system needs a loan, or the money wouldn't have grown,

Inflation cheapens the debt, and stability's the bet.

But loans needs borrowers and lenders to boot

The central banks end up shooting us in the foot!

Tue, 06/12/2012 - 07:31 | 2517288 Sudden Debt
Sudden Debt's picture



bye now....



Tue, 06/12/2012 - 07:35 | 2517293 Dr. Engali
Dr. Engali's picture

Sorry I beat you to the lifeboat. I headed to the retreat yesterday. Taking an inventory and running down the check list.

Tue, 06/12/2012 - 07:41 | 2517304 TheInfoman
TheInfoman's picture

Be careful.  That lifeboat was made in Greece.

Tue, 06/12/2012 - 07:49 | 2517324 Sudden Debt
Sudden Debt's picture

And the glue that keeps it all together comes from Spain...


Tue, 06/12/2012 - 08:01 | 2517347 magpie
magpie's picture

Long lifeboat options ?

Tue, 06/12/2012 - 07:40 | 2517303 Dr. Engali
Dr. Engali's picture

I think I ate the dead cat last night when I went out for Chinese.

Tue, 06/12/2012 - 07:50 | 2517321 Pretorian
Pretorian's picture

Nice job Goldman, bring now Gathner, Monti and Draghi to beach more know so you can put German against wall to suck their Balls.


Tue, 06/12/2012 - 08:34 | 2517423 ghostzapper
ghostzapper's picture

Tyler - any updates on those CDS? (insert picture of man eating popcorn and lounging on couch)

Tue, 06/12/2012 - 08:40 | 2517443 Venerability
Venerability's picture

It's a bleep-bleep Three Auction Treasury Note week. So the Ninnies are going back to pure Rote and continuing to bleep Gold and Oil - even though with the 10-year hovering at 1.60, it becomes detrimental to everyone everywhere to do so.

There's pent-up Momo on the UPside now, IMO. And the nanosecond they take the piles of bricks off Gold and Oil, the market may recover everything it lost yesterday and then some.

Meanwhile, Silver is still chomping at the bit, as are the Silver stocks.

And the Bubblevisions can mis-report all they want on the OPEC meeting before the fact. We all know it's going to be a messy, volatile, and possibly very surprising one.




Tue, 06/12/2012 - 09:04 | 2517515 Boilermaker
Boilermaker's picture

Ahhhh, the old "dead cat" bullshit.  God, I love that cliche' stuff.

Risk On / Risk Off

Green Shoots



<insert> DMA

Seller exhaustion

Buying panic

Selling panic


Tue, 06/12/2012 - 09:14 | 2517548 GeneMarchbanks
GeneMarchbanks's picture

Tarder jargon.

Result: one type of causal explanation predominates more and more, is concentrated into a system and finally emerges as dominant — that is, as simply precluding other causes and explanations. --Nietszche

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