Deutsche Bank Yield Curve Inverts As Counterparty Risk Hedging Spikes Despite DoJ Rumors

As the mainstream media attempts to mollify the ignorant masses with rumors of reduced DoJ fines for DB (as if that the problem now), professionals are buying counterparty risk protection at the fastest pace in history.

 

If you are a leveraged fund with client relationships with Deutsche Bank, you have a number of options including: 1) Reduce excess cash (already saw yesterday as hedge funds begin run), 2) Demand tri-party arrangements (i.e. force DB to allow you not to face them as a counterparty - which we have also already seen), or 3) Reduce risk (unwind positions or hedge potential for loss from counterparty risk)

And now that final hedging of Counterparty Risk is occurring at a rapid pace.

 

While the stock price bounces on completely unconformed reports of DOJ reducing its DB fines (which is irrevelant now that DB has become a liquidity issue), Professionals are ploughing into protection, pulling cash, and demanding tri-party.

This has inverted the DB yield curve - a very ominous sign.

 

It took a global coordinated money flood to save the world systemically in Feb... what happens next?