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...

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 06/12/2012 - 10:13 | 2517759 Dr. Engali
Dr. Engali's picture

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

Tue, 06/12/2012 - 10:15 | 2517789 camaro68ss
camaro68ss's picture

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

Tue, 06/12/2012 - 10:20 | 2517812 SilverTree
SilverTree's picture

Gold has a nice boner today.

Tue, 06/12/2012 - 11:22 | 2518084 surf0766
surf0766's picture

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

Tue, 06/12/2012 - 12:53 | 2518465 The Monkey
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.

Tue, 06/12/2012 - 11:14 | 2518054 Winston of Oceania
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...

Tue, 06/12/2012 - 10:11 | 2517770 dereksatkinson
dereksatkinson's picture

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

Tue, 06/12/2012 - 10:19 | 2517808 kridkrid
kridkrid's picture

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

Tue, 06/12/2012 - 10:27 | 2517839 SilverTree
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."



Tue, 06/12/2012 - 10:11 | 2517772 Cursive
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.

Tue, 06/12/2012 - 10:13 | 2517781 hedgeless_horseman
hedgeless_horseman's picture



Mostly, it is that bond traders are smarter.

Tue, 06/12/2012 - 10:22 | 2517816 Eclipse89
Eclipse89's picture

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

Tue, 06/12/2012 - 11:24 | 2518092 RazvanM
RazvanM's picture

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

Tue, 06/12/2012 - 14:15 | 2518781 hedgeless_horseman
hedgeless_horseman's picture



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

Tue, 06/12/2012 - 10:15 | 2517783 CcalSD
CcalSD's picture

I'm sensing a pattern here...

Tue, 06/12/2012 - 10:14 | 2517784 Conman
Conman's picture

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

Tue, 06/12/2012 - 10:16 | 2517795 CreativeDestructor
CreativeDestructor's picture

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

Tue, 06/12/2012 - 10:26 | 2517806 BlandJoe24
BlandJoe24's picture

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

Tue, 06/12/2012 - 10:36 | 2517871 HarryM
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.

Tue, 06/12/2012 - 10:19 | 2517810 pleseus
pleseus's picture

Equities are in a world of their own HFT making.

Tue, 06/12/2012 - 11:12 | 2518034 Winston of Oceania
Winston of Oceania's picture

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

Tue, 06/12/2012 - 10:21 | 2517814 ruffian
ruffian's picture

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

Tue, 06/12/2012 - 10:23 | 2517820 junkyardjack
junkyardjack's picture

Rinse wash repeat...

Tue, 06/12/2012 - 10:22 | 2517818 bigwavedave
bigwavedave's picture

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

Tue, 06/12/2012 - 10:22 | 2517819 junkyardjack
junkyardjack's picture

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

Tue, 06/12/2012 - 10:23 | 2517822 fonzannoon
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.

Tue, 06/12/2012 - 10:23 | 2517823 my puppy for prez
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:


Tue, 06/12/2012 - 10:26 | 2517836 marketcycles79
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.



Tue, 06/12/2012 - 10:26 | 2517837 lolmao500
lolmao500's picture

Stocks are on the kool aid.

Tue, 06/12/2012 - 10:35 | 2517863 Village Smithy
Village Smithy's picture

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

Tue, 06/12/2012 - 10:47 | 2517911 brooklynlou
brooklynlou's picture

Jerry, it was shrinkage! Shrinkage I tell you.

Tue, 06/12/2012 - 10:43 | 2517894 crshinn
crshinn's picture

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

Tue, 06/12/2012 - 10:47 | 2517910 slaughterer
slaughterer's picture

Profit from the crash only if you got the cash.  

Tue, 06/12/2012 - 11:41 | 2518180 PeeramidIdeologies
PeeramidIdeologies's picture

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

Tue, 06/12/2012 - 10:49 | 2517918 slaughterer
slaughterer's picture

Market today is an inverse overlay of 


Tue, 06/12/2012 - 10:50 | 2517925 Conman
Conman's picture

PPT stick save!!! Right on time!

Tue, 06/12/2012 - 10:58 | 2517970 Snakeeyes
Snakeeyes's picture

All of Europe is up in the sov arena this morning. Nice bailout!


Tue, 06/12/2012 - 11:13 | 2518040 surf0766
surf0766's picture

WHat turn everything roses all of a sudden?

Tue, 06/12/2012 - 11:27 | 2518109 nolla
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.

Tue, 06/12/2012 - 12:31 | 2518387 Mugatu
Mugatu's picture

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

Tue, 06/12/2012 - 13:10 | 2518523 q99x2
q99x2's picture

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

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