What Does European Credit Know That Stocks Don't?

Tyler Durden's picture

European credit markets are near one-week wides, having tumbled dramatically since yesterday's open. Investment grade credit is leading the charge followed by senior financials as professional investors look for macro protection - we suspect ahead of this weekend's election. However, European equities are modestly higher from yesterday's close and remain higher than Friday's close. Credit markets had their own dead-cat-bounce at the open this morning but that has since faded significantly, so for now, as we have said again and again 'credit anticipates and equity confirms', it seems credit is seeing something a little less sanguine ahead for now. In the meantime, Spanish and Italian sovereign debt is pushing higher in yield (Spain +74bps from yesterday's open to euro-era record highs) and Swiss 2Y rates have hit a new record low at -36.6bps.

European equities (dark blue) in a world of its own compared to credit as investmnet grade credit (impacted by financials obviously) are at one week wides.

and European sovereign spreads are all bleeding with Spain (and Italy) now over 70bps wider than their open yesterday...

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Dr. Engali's picture

Is there something going on in Europe I should know about? Did I miss the soccer match?

camaro68ss's picture

And.........Its gone!!!!!!

SilverTree's picture

Gold has a nice boner today.

surf0766's picture

Someone knows something. No news and +100  .. yea right.

The Monkey's picture

Time again for the QE rally, which will knock out many shorts, weaken the dollar and move funds into risk (even Spanish & Italian bonds and banks).

Will be interesting to see how far the Fed goes.

Winston of Oceania's picture

Gold oil and wheat are the stock of war, I hope the idjits in Washington have been as prudent as our neighbors in Asia. Yes I still think Turkey is part of Asia, silly me...

dereksatkinson's picture

Turkey Monetized gold and made it a tier 1 asset... 

kridkrid's picture

they're going to be pissed when they discover that their tier 1 asset isn't backed by anything.  

SilverTree's picture


http://www.goldcore.com/goldcore_blo...d-turkish-bank Quote :


Turkish people can pay in gold in certain foreign exchange houses and most jewellers will accept gold as payment. Turkish banks are is now offering digital gold saving accounts.

Turkey expanded its gold reserves by 29.7 metric tons in April. Turkey’s bullion reserves climbed to 239.3 tons last month meaning that Turkey increased their gold reserves by 14% in April.

The central bank on March 27 doubled the share of lira reserves banks can hold in gold to 20%, saying it would provide 6.1 billion liras ($3.3 billion) of extra liquidity.

"This addition," the WGC says, "was the result of a policy change under which the central bank will now accept gold in reserve requirements from commercial banks to help the banks utilize their gold in managing their liquidity."



Cursive's picture

I know the title of the post is a rhetorical question (and I love everytime it is posted since I don't follow credit markets that diligently), but I'll just add that credit markets are much bigger than equity markets and, therefore, much harder to manipulate.

hedgeless_horseman's picture



Mostly, it is that bond traders are smarter.

Eclipse89's picture

I hope this ignorance gap to keep rinsing and repeat as it worth a lot.

RazvanM's picture

Yeah, the bond traders were very smart buying Greece debt and getting The Haircut.

hedgeless_horseman's picture



I think you mean Canadian pension consultants, not bond traders.

CcalSD's picture

I'm sensing a pattern here...

Conman's picture

Bloomberg reporting Fitch Cuts Long-Term Ratings on 18 Spanish Banks

CreativeDestructor's picture

Every village has one idiot. Equities is the idiot of the financial village.

BlandJoe24's picture

Tyler, thank you!  Your ZH postings alerting us to moments when "credit anticipates and equity confirms" have been very helpful.

HarryM's picture

Sorry I can only give you 1 thumbs up , or I'd be hitting the thumbs up like a lab rat hitting the lever for more cocaine.

pleseus's picture

Equities are in a world of their own HFT making.

Winston of Oceania's picture

But but HFT's provide liquidity to the market. Who knew you'd need boots for all this liquidity?

ruffian's picture

what does GOLD know? verticle launch............

bigwavedave's picture

Im thinking of lending Spain some Euros at 7%..................................... Nah

junkyardjack's picture

Must be the same thing that oil and most of the other commodities knows....

fonzannoon's picture

CNBSHIT is actually reporting Germany demanding gold as collateral. Still those bucket heads can't connect the dots to what gold is and what purpose it serves. They will now talk about bank runs and then question where that money is going to go. Astonishing.

my puppy for prez's picture

A GREAT video commentary on many things concerning the back story to current crises from money, war, and politics:


marketcycles79's picture

My friend has been very good at seeing recent turns in the market and has helped keep me on the right side of the tape. - humblestud????????????????e?n?t Jun 10, 2012 weekend report:
<< the roadmap is progressing very well, near identical to the pattern.



lolmao500's picture

Stocks are on the kool aid.

Village Smithy's picture

Obviously European credit don't have a PPT that is as well endowed as our own.

brooklynlou's picture

Jerry, it was shrinkage! Shrinkage I tell you.

crshinn's picture

I think the stock markets just figured it out.  Red is the new green.

slaughterer's picture

Profit from the crash only if you got the cash.  

PeeramidIdeologies's picture

Cash on the sidelines is a popular phrase. The Greeks know it.

slaughterer's picture

Market today is an inverse overlay of 


Conman's picture

PPT stick save!!! Right on time!

surf0766's picture

WHat turn everything roses all of a sudden?

nolla's picture

I think one factor affecting European equity bullishness is the quarterly OpEx. this coming Friday. Has been a proven pattern (every time up) since mid last year.

As should be the upcoming end of the quarter, 6 months reports and updates - HFs need to window dress those.

Mugatu's picture

I am short Spanish Bonds and long Ugandan Bonds.  Already have a nice profit.

q99x2's picture

Bad European credit is good for stocks if you are short and stocks go down from here.