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Spanish Spreads Jump Most Since July As Italy 10Y Breaches 6% Again

Tyler Durden's picture




 

Presented with little comment, except to say reality is returning as credit markets are starting to price in some disappointment. Italy 5Y is underperforming as the basis trades we mentioned yesterday are unwound and Italy 10Y has broken back over 6% as their curve remains inverted. Spanish 10Y spreads are up over 35bps today and 50bps from yesterday's tight print as Belgium and Italy follow suit. The swing in Spanish 10Y spreads, on a percentage basis, is massive, empirically, from a 4.5 standard deviation compression on Monday to a 2.5 standard deviation decompression today as today's widening in the biggest relative jump since July 11th - more small doors and large crowds?

10Y Sovereign spreads across Europe are accelerating wider today as reality sets back in.

On a percentage basis, Spanish 10Y spreads dropped over 17% (4.5 stdevs) on Monday and then jumped almost 12% today (2.5 stdevs). How is that going to help with asset allocation and risk budgeting?

Charts: Bloomberg

 

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Wed, 12/07/2011 - 10:58 | 1954714 Jonbutterfly
Jonbutterfly's picture

Investors may decide to let the Euro live, according to the video. But do investors really have any power? Everything falls back on the central banks and corrupt politicians. Only a matter of time before everything collapses: 
http://djia.tv/reuters/breakingviews-investors-may-decide-to-let-the-eur...

Wed, 12/07/2011 - 11:41 | 1954857 Chris Jusset
Chris Jusset's picture

So who will get the bailout first?  Italy or Spain?  Will the bailout(s) be before or after the printing presses are placed on turbo?

Wed, 12/07/2011 - 11:00 | 1954720 TheAkashicRecord
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(UK) Police include Occupy movement on ‘terror’ list http://tiny.cc/lltw5

 

Wed, 12/07/2011 - 11:38 | 1954846 Global Hunter
Global Hunter's picture

read it last night, I recommend everybody does and then just contemplate it for a moment.  

Wed, 12/07/2011 - 11:42 | 1954861 TheAkashicRecord
TheAkashicRecord's picture

Hopefully they will have a separate ZeroHedge section for all of us

Wed, 12/07/2011 - 11:50 | 1954883 end da fed
end da fed's picture

im looking forward to putting faces with usernames

there are some brilliantly funny people on here too. should make for a good time

Wed, 12/07/2011 - 13:49 | 1955405 jonan
jonan's picture

see you there bro! we can use cigs for currency, i'll be sure to bring some!

Wed, 12/07/2011 - 11:54 | 1954906 Max Hunter
Max Hunter's picture

I'm still trying to get my head around the new NDAA bill about to be passed... What the hell is our government expecting?  Who is sitting back and thinking to themselves; goodness, we need a really strong tool for our Military to grab people off the streets and through them into prisons and forget about them?  This is very disturbing... Very disturbing indeed.. It should scare the shit out of any person that takes a moment to think about this objectively and search their mind for a reason our government thinks they need such a law...

Wed, 12/07/2011 - 12:01 | 1954939 TheAkashicRecord
TheAkashicRecord's picture

//to think about this objectively//

Objective thinking, haha.

We are at War with the terrorists so anything is justified.   

//we need a really strong tool for our Military to grab people off the streets and through them into prisons and forget about them?//

If you read any OWS article comments on conservative websites, many of the commenters wouldn't have an issue with the Military doing that to these people. 

TPTB thrives on creating these divisions - when our rage is directed against fellow citizens or boogeymen abroad, that is the opportune moment for them.  You know what they say, don't let a crisis go to waste!

Wed, 12/07/2011 - 12:06 | 1954958 kridkrid
kridkrid's picture

Yet it doesn't move the needle.  We are conditioned into outrage based on what is fed to us through the media.  We can read something "outrageous" but need it to be reinforced for us in order to "feel".  It is remarkable to watch. 

It works on a couple of different levels.  If you were to take this "outrageous" news to a friend, they are able to dismiss it because the drumbeat of outrage can't be heard.  In fact, not only do they dismiss it, they immediately label you as a loon, or a conspiracy theorist or whatever box they choose.  This feedback loop marginalizes our free thinkers. 

Wed, 12/07/2011 - 11:57 | 1954917 kridkrid
kridkrid's picture

http://armypubs.army.mil/epubs/pdf/R210_35.PDF - The document on civilian prison camps on army bases is interesting.  An unclassified document just sitting out there discussing who feeds these civilian labor camps.

Wed, 12/07/2011 - 12:44 | 1955111 J 457
J 457's picture

I know you won't like to hear this, but another opinion can sometimes help balance ones opinion.  If you recall, the govt received much negative press after Katrina for not being fully prepared.  Now that they are attempting to become better prepared for the next inevitable disaster- earthquake, or hurricane, or tornado, or whatever, the conspiracy theorist are coming out suggesting its a plan for the next Manzanar.  Is it not possible these "camps" are nothing more than FEMA attemptong to better prepare for an actual disaster and a safer place for displaced people to go (unlike the stadium in New Orleans) as opposed to some conspiracy theory about rounding up the average citizen?  I watched a video about US military personnel defending OWS people from NYC police.   Based just on that small sampling, I wonder how successful or defiant the armed forces would be if they were actually ordered "against" their fellow countrymen.  I wouldn't be too worried about this new bill, there are bigger issues to think about.  

Wed, 12/07/2011 - 12:55 | 1955162 kridkrid
kridkrid's picture

You saw that video as military vs. NYC police?  That isn't what you were watching.  You were watching a former soldier, as a civilian, defending the OWS movement.  Very different from the words you used.

But you do connect with an issue that may ultimately arise (and we have seen the play out all over the globe).  At what point will the military not support the government vs. the people?  Difficult to say.

Wed, 12/07/2011 - 13:04 | 1955215 J 457
J 457's picture

I watched that one of the former soldier too.  There was another one, where supposedly off-duty, but enlisted Marines, were talking about grouping together to assist a soldier that was injured.  Who knows- with so much news constantly streamed from hundred of sources it difficult to impossible to determine what is fact or fiction.  Unless you are right there amongst the crowd or watching a livestream.  Point is, its anyones guess what direction this type event would take. 

Wed, 12/07/2011 - 13:49 | 1955409 teolawki
teolawki's picture

@J457

"I wouldn't be too worried about this new bill, there are bigger issues to think about."

Sorry to disagree, but there is no bigger issue than freedom. Our current situation is a direct consequence of total debt/financial enslavement by the criminal banking and financial cartels. Governments are now wholly owned subsidiaries of said cartels and push this type of legislation for future use in "crowd control". Governments are nothing more than their enforcement branch.

Wed, 12/07/2011 - 11:00 | 1954723 Irish66
Irish66's picture

how is greece spreads'..

Wed, 12/07/2011 - 11:15 | 1954785 Sudden Debt
Sudden Debt's picture

for food or sigarets

Wed, 12/07/2011 - 11:19 | 1954803 srsly-wtf
srsly-wtf's picture

or legs

Wed, 12/07/2011 - 11:00 | 1954727 Careless Whisper
Careless Whisper's picture

NOTE To: Italy, Greece, Spain, Ireland, and everyone else over there except Germany:  Iceland's GDP grew by 4.7% in the third quarter.  Just sayin'

http://www.businessweek.com/news/2011-12-07/iceland-s-economy-grew-4-7-i...

 

 

 

Wed, 12/07/2011 - 11:20 | 1954791 hedgeless_horseman
hedgeless_horseman's picture

 

 

This will not be allowed...cue the volcano Einkasyallmakuslukbad.

Wed, 12/07/2011 - 11:01 | 1954732 Captain Kink
Captain Kink's picture

I look forward to the announcement of the "deal".  And the selloff that will follow....  There is only one solition.  The final solution.  DEFAULT.

Wed, 12/07/2011 - 11:21 | 1954808 srsly-wtf
srsly-wtf's picture

don't you know you can't say final solution?

Wed, 12/07/2011 - 12:37 | 1955073 Captain Kink
Captain Kink's picture

nice.  did I say that?...er, um, well... if the shoe fits... walks and talks like a duck... or something

Wed, 12/07/2011 - 11:06 | 1954751 DormRoom
DormRoom's picture

it should get real once ECB sterilization program ends.  we should bet close to the limit. mid January-early February?

Wed, 12/07/2011 - 11:07 | 1954757 hugovanderbubble
hugovanderbubble's picture

Spain will be downgraded as ALL OUR COMUNIDADES AUTONOMAS ARE IN DEFAULT

Wed, 12/07/2011 - 11:12 | 1954771 falak pema
falak pema's picture

Just like US munis and their debt burden is Mega bigger than Spain's.

Wed, 12/07/2011 - 11:13 | 1954766 falak pema
falak pema's picture

GS cabal preparing for Standoff with Germany as Merkel will not toe party line. The attack on EUro will hot up as chances of ECB mega print option announcement in Friday's meeting fades. Merkel is showing intransigence to Van Rompuy's demand to ramp ECB play.

Wed, 12/07/2011 - 11:13 | 1954781 GMadScientist
GMadScientist's picture

But is she jerking their chain or playing for time while the BB prints DM?

Wed, 12/07/2011 - 11:20 | 1954805 falak pema
falak pema's picture

I don't know what her real margin of maneuver is. The Squid has got Euro zone fiscal union on fast track mode w/o popular consultation. Something Merkel would have preferred to see through parliament but she conceded to Sarkozy to get him backing down on ECB role. GS and friends wanted BOTH fast track fiscal union and Ecb print to infinty. They got one but it seems have failed to get the other. Van rompuy and Sarkozy obviously are more aligned with the US position. Merkel is playing her German card against a lot of coercitive pressure from EU technocrats/France /US Oligarchs.

Wed, 12/07/2011 - 11:15 | 1954786 GMadScientist
GMadScientist's picture

I seem to remember a similar extension of dominion in the US past...something to do with Gettysburg, Shiloh, Antietam, and the like.

 

Wed, 12/07/2011 - 11:12 | 1954776 Cassandra Syndrome
Cassandra Syndrome's picture

Beats Estimates bitchez...

Wed, 12/07/2011 - 11:16 | 1954787 Cult_of_Reason
Cult_of_Reason's picture

The short squeeze that was engineered by the central banks has ran out of the shorts.

Wed, 12/07/2011 - 11:16 | 1954789 blueridgeviews
blueridgeviews's picture

We all know deep down that interest rates for these countries will be right back where they were in short order. You can't fix a spending problem with more spending and you can't borrow money from broke country's.

Wed, 12/07/2011 - 11:18 | 1954797 gjp
gjp's picture

It's ok, American consumer stocks are up again, hitting new highs.  It's all good news for selling more crap to broke Americans.

Wed, 12/07/2011 - 11:18 | 1954798 Oh regional Indian
Oh regional Indian's picture

Small doors, large corwds, interesting analogy.

ORI

/the-plan/

Wed, 12/07/2011 - 11:18 | 1954800 vegas
vegas's picture

Oh sure, I'd sell gold and then loan the proceeds to the Itals. WTF.

No @ 6%, no @ 10%, [hint] there ain't no yield price.

 

http://vegasxau.blogspot.com

Wed, 12/07/2011 - 12:15 | 1954991 unununium
unununium's picture

> No @ 6%, no @ 10%, [hint] there ain't no yield price.

If you had that attitude in 1981, you waited close to 30 years before being proven right.

Wed, 12/07/2011 - 11:20 | 1954806 el-kalif
el-kalif's picture

(any mean to have a CDS update ? thanks !)

Wed, 12/07/2011 - 11:25 | 1954817 Hmm...
Hmm...'s picture

a quick note to MillionDollarBonus related to the previous thread about sovereign CDS.

wow... as I said in the last thread, it is ALMOST as though these Sovereign Bond Yields and Sovereign Bond Prices tell us something about the credit worthiness of the Sovereign nations. 

So do we really need a CDS market to tell us this information?  Who among you trusts the price action of one of the most liquid markets on Earth (Sovereign Debt Markets) LESS THAN the price action of a thinly traded opaque market that is rife with collusion and manipulation by a small number of parties (the CDS market)? 

who here NEEDS the CDS price action when you have these charts?

who here CARES what Fitch or Moody's says about sovereign default risk?

and this was my beef.  Not only do we not need the credit agencies and the CDS market to help us see where to put and not put our money... we also don't WANT them to do it because their data is inherently flawed.

all we need is the bond prices/yields.  Yes... the prices are affected by Central Bank manipulation, but no more so than the same manipulation they do to the CDS market, and I'm not even discussing the credit ratings agencies.

Wed, 12/07/2011 - 11:38 | 1954823 firstdivision
firstdivision's picture

EZ bonds have all been loony due to the rumors that flew around last week.  They are still too rich at the moment, not a damn thing has been done to fix their issues.  The EZ crisis is playing out like an episode of Gossip Girl (yes, my ex forced me to sit through some of those).

OT: Shorting MBI now (@$11.01)!  Let's see if I lose on this bet or win.

Wed, 12/07/2011 - 11:26 | 1954824 RobotTrader
RobotTrader's picture

Retailers still pinned at 3-year highs.

Los Angeles gas prices are imploding:

http://66.70.86.64/ChartServer/ch.gaschart?Country=Canada&Crude=f&Period...$/G

Wed, 12/07/2011 - 11:29 | 1954828 firstdivision
firstdivision's picture

Yet WTI refuses to drop, and Brent fell a bit but we'll see.

Wed, 12/07/2011 - 11:30 | 1954830 TzaristBondHolder
TzaristBondHolder's picture

I am curious where the actual money come from.  Watch and LAUGH.....    http://inkom.com.au/blog/explaining-european-debt-crisis

Wed, 12/07/2011 - 11:36 | 1954838 Dick Darlington
Dick Darlington's picture

Finland finds they DO HAVE constitutional rights even though the EU-dictatorship tries to rape every taxpayer in Europe to the bone.

Finnish news agency YLE writes (very bad Google translation):

German and French proposal by qualified majority decisions in the euro area of ??permanent crisis fund could crash Finnish constitutional obstacles. Constitutional expert consensus, the abandonment of a crisis fund of funds allocation violate the Finnish taxpayers' rights.

A large committee heard on Wednesday, the constitutional expert Charles the Tuoria. He considered the proposal infringes the rights of Finnish taxpayers.

- Finland will lose EVM's decisions on the right of veto. Finland can not be bound by the decisions relating to the Finnish taxes on the use of taxpayers without their consent.

Opposition True Finns leader Timo Soini, requires that a unanimous decision must be adhered to.

- The situation is very serious, and young leaders are under pressure. They must not agree to this, because when it is removed now, Finland has the chip on the waves. It should not be acceded to, Soini points.

 

http://translate.google.com/translate?sl=fi&tl=en&js=n&prev=_t&hl=fi&ie=...

Wed, 12/07/2011 - 11:38 | 1954849 RobotTrader
RobotTrader's picture

Where is the "big crash" that is supposed to happen?

SPY still way over the 21-day EMA

http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=9&dy=0&id=p89856153409

And the 50-day:

http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=9&dy=0&id=p31628827969

Wed, 12/07/2011 - 11:48 | 1954881 firstdivision
firstdivision's picture

...yet it is still below the 200DMA.

Wed, 12/07/2011 - 11:41 | 1954858 lizzy36
lizzy36's picture

Whenever i think of Spanish ot Italian bondholder bolting to the exits i can't help but visualize "run forest run".

Wed, 12/07/2011 - 11:44 | 1954867 slaughterer
slaughterer's picture

I am assuming market is in enough of a state of delusion to be able to ignore these bond spreads for another day or two.  

Wed, 12/07/2011 - 11:51 | 1954893 Caviar Emptor
Caviar Emptor's picture

Spain has 22.8% Official unemployment at last report (November). 

At that level, and I hate saying it, the economic system can be pronounced dead. 

It means an entire generation is lost (at the very least 1, more likely 2 or 3) 

And without full blast social welfare programs can there be any doubt where that would leave Spain?

But even that scenario has serious obstacles: how to fund it given that global cost structures are rising despite the Spanish economy being in a deep depression? 

How indeed. Spain is the poster child for the failure of the global economic master plan

Wed, 12/07/2011 - 11:54 | 1954904 mn2
mn2's picture

Its amazing how when italian bonds went from 7.25% to 5.75% ZH never made any comments.

Wed, 12/07/2011 - 12:39 | 1955081 metaxzen
metaxzen's picture

I like graphs. They make me feel smart. Even when I don't understand them. 

Wed, 12/07/2011 - 12:50 | 1955143 YesWeKahn
YesWeKahn's picture

Rumor based recovery doesn't work.

Wed, 12/07/2011 - 14:50 | 1955614 Snakeeyes
Snakeeyes's picture

Yup, Italy, Spain and Belgium all had a bad yield day. And look at the economic reports out of Eurozone. Even Germany is slowing (but still healthy).

 

Rumble on The Rhine – Uncertainty About The Eurozone Treaty (Italy, Spain and Belgium Yields UP)

http://confoundedinterest.wordpress.com

 

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