Panic, Crisis In Italy: Dealers Pull Bids As Bonds, Stocks Crash; Euro, Deutsche Bank Tumble As Contagion Spreads

With UK traders returning from vacation, Italy woke up to a sheer selling panic as yesterday's "modest" selloff mutated into a full-blown liquidation avalanche, lead by a furious repricing of the BTP curve, where 2Y yields exploded another 170 bps higher on the day rising to 2.60% from negative just a few days ago...

... the biggest one day move in Italian 2Y yield in history...

... while the 10Y blew out as much as 70bps to 3.40%, now finally higher than US Treasurys...

... its biggest one day move since the 2011 European debt crisis...

... sending the Germany-Italian spread wider by 50bps to over 300 bps, the highest in 5 years.

Confirming the market revulsion to anything Italian, today's 6-month bill sale by Rome was met with surprisingly poor demand, covered 1.19 only times, the lowest since April 2010, despite what continues to be an ECB backstop.

Stocks fared no better, with Italian equities tumbling as much as 3% today and now back to the lowest level since last July...

... while Italian banks are now well inside a bear market, down 24% from their recent April highs.

As a result of the panic selling, not seen since the days of the European sovereign debt crisis in 2011/2012, dealers pulled their price indications, which according to Bloomberg signalled dealer unwillingness to trade given the excessive volatility.

But what is even worse is that this is no longer just an Italian crisis, as Deutsche Bank stock tumbled below €10 for the first time since its existential close encounter in September 2016, and just why of all time lows, on fears Italy's problems will spread beyond its borders...

... but it's not just Germany as French banks are also getting slammed:

  • FRENCH MAJOR BANKS' 5-YEAR CDS JUMP 50 BPS OR MORE FROM MONDAY CLOSE ON ITALIAN POLITICAL RISK, BNP PARIBAS HIGHEST SINCE APRIL 2017 -IHS MARKIT

... while the EURUSD tumbles below 1.16, the lowest since last July as murmurs of "parity" are once again emerging.

Yesterday we predicted that it is only a matter of time before Europe and the ECB ban shorting of Italian bonds, and we are sticking with it, although at this point - now well past contagion - it is unclear if such a dramatic action will have much of an impact.

Meanwhile, all eyes on Draghi to see how the ECB responds now that Europe is once again facing threats to both its currency, as well as its very existence.

Comments

mkkby shankster Tue, 05/29/2018 - 11:36 Permalink

Listen up... been saying for years.  US dollar goes UP every time there's a crisis somewhere.  Look at the bond yields today, WAY DOWN.  Anyone who's ever traded knows the US is the safe haven, EVERY SINGLE TIME.

The us dollar will have it's crisis.  But not before japan, most of europe and even china.  We are decades away from this, judging by how long it's been since Greece tried to crash but was bailed out.

The italian people are voting for more socialism, more free shit, more debt spending.  Anything but living like adults on what they can reasonably produce.  This crisis has a long long way to go.  Millenials may live to see it play out to the end.

In reply to by shankster

Dave the jew bigkahuna Tue, 05/29/2018 - 06:53 Permalink

Nothing has ended! At most this little episode will end with a bank folding , at most ! 

Its going to end for the masses , as they are more concerned with the royal wedding then anything remotely important! You might have a eek of complaint when their standard of living drops yet again , but that’s all !

the masses truely believe , the likes of Syria or Venezuela Cannot happen to them! That is why the west will be the worst places to live in the next 10 - 20 years maybe sooner ! The dumb sheeple will still be queuing for the doll cheque and cigarettes scratching their silly heads wondering why they haven’t been pain! My goodness the liberals have well and truly won in the west !! 

In reply to by bigkahuna

Dave the jew XBroker1 Tue, 05/29/2018 - 07:30 Permalink

It might well be a Jewish ideologically driven agenda at the helm but ultimately we’re in control of how we act and react ! The masses are quite able to disseminate the truth and bullshit , but they are to Lazy , to dumb, to beaten into submission! They don’t have to act like effeminate weak mice in the face of such provocation, and insanity, but they do !! That is the mentality of the liberal left . They can quite easily not entertain this utter nonsense , but they love it ! The liberals have won ( for now ) if you feel happy blaming every weak , gutless , hippy act on the Jews , then crack on ! Sounds abit weak to me !! We all know they have an agenda , so do many! At the end of the day thier is a right way to act  ! And a wrong way  !  A Good way or an  evil way  !! Quite simple . Blaming the big bad Jews sounds almost like your a weak faggot ! Get off your fat arse and do something of note , talk is cheap  !! 

In reply to by XBroker1

indygo55 Tue, 05/29/2018 - 06:37 Permalink

Now all these stories come to be important. There will likely be another dramatic terrorist attack and or a "natural" disaster to cover the headlines over this very important reality. There needs to be "content" in the news that masks the slow financial meltdown we are witnessing and that have been predicted for years. Things were never really fixed from the GFC and all the money creation and debt created HAD to eventually destroy the system. Even Keynes predicted it. Maybe, just maybe this is the turning point. I admit they are geniuses at keeping the spinning plates going but at some point gravity takes hold. 

nmewn Tue, 05/29/2018 - 06:38 Permalink

Clearly Draghi is going to have to counterfeit some more paper, to purchase more paper, in order to back the paper being printed ;-)

Dilluminati nmewn Tue, 05/29/2018 - 06:58 Permalink

People who are looking at a snapshot of any financial illustration, dollar > 3% or < 3% or this or that stock chart, or whatever can become myopic in making statements of only a balance sheet provides.  What you should be looking at instead is how these failed institutions maneuver and what they do to ensure their own survival when it is apparent to the majority of whom they really serve.

As crazy as this sounds the people in Europe live under plantation politics, dictated rights, and actual serfdom, limited in what they can say, what knives they can carry, and whom can come and go in their nations.  They take pride in soccer and the dress of their icons in marriages that they cannot attend.  The good news is that the end-game is baked in and you should clearly see the outcome, have time to make correct moves, but the real end to this tyranny might take some time and hopefully it does.. and you should have some faith in the appetite for the sweet taste of shit the people in Europe have cultivated.

It is the most absurd example of plantation politics conceived and though it serves but only the very very few.. the people of Europe are proud of their sweet taste of shit and will cling to their current system until the majority of those absolutely not served actually revolt.  

 

In reply to by nmewn

mkkby Dilluminati Tue, 05/29/2018 - 11:43 Permalink

Correct, but lose the victim mentality.  Nobody is forcing the 80 percenters to be stupid.  They put the needle in their own arm.  Self inflicted.  Therefore, no sympathy.

Sheeple are too stupid and lazy to produce anything of value.  They want socialism.  A few smarties will help them get it... for a price.  Occasionally the bill comes due painfully, but they never learn, do they?

In reply to by Dilluminati

buzzsaw99 Tue, 05/29/2018 - 06:46 Permalink

a short ban merely buys them a brief rally.

I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part.  [/otter]

Dilluminati Tue, 05/29/2018 - 06:49 Permalink

I think the EU and the affected banks will do what is needed to gloss over the balance sheet distortions, will enact more legislative decrees, and in the process further deteriorate the standard of living in the EU and force it further under the EU control, each emergency and each problem created by the EU looking for a solution from the very actor who created it.

I would not run after the market trying to short anything knowing that the facade is such that no matter how apparent the facts that the EU serves only the few, the 1%, that the demise isn't yet, and that the unwinding will be political and sudden, and that it will be not a matter of if but when.

But I don't think the last global downturn has resulted in anything from the EU more than more absurd statements on what can and cannot be spoken, what knife can and cannot be carried, what can and cannot be reported, and under what conditions exit from the plantation can be undertaken.  

As amazing as this now sounds my bet is that it gets WORSE before there is change, which for those who are paying attention is good.. as it provides time to prepare. 

Batman11 Tue, 05/29/2018 - 06:55 Permalink

As we know Mario controls the Euro-zone bond yields.

It's not the markets, it's Mario.

He can bring the yields down if he wants.

The markets would have destroyed the Euro-zone years ago without Mario’s intervention.

Mario's magic words are needed "do whatever it takes"

 

KimAsa Tue, 05/29/2018 - 06:55 Permalink

Deutsche Bank at maxed out speed in “autopilot” mode in Tesla Model 3 on autobahn, autopilot becomes confused and hits concrete barrier, lithium battery pack casing breached, ignites vehicle into strange-looking tongues of white fire, Deutsche Bank unable to exit vehicle, ECB arrives on scene with multiple attempts to rescue victim from burning vehicle in 3. .3. .3. . 

To Hell In A H… Tue, 05/29/2018 - 06:55 Permalink

The entire system was a house of cards before the 2008. The greedy shyster bankster cunts, merely doubled down on the greed, fraud and criminal financial behaviour and looted for all its worth. QE for the privileged and debt bondage for the rest. 

Apart from token bank stress tests which they watered down several times because not enough banks would pass, there was zero reform post 2008, because the mantra was "government regulation is bad, voluntary regulation is best" Seriously? This forum is so brainwashed, that if the government said "having unprotected sex with an aids carrier is bad" half this forum would rile against it.

This attack on Italy is so predictable, because of the election results and what the new coalition stands for.  I thought the financial crash would have taken place early 2015 to late 2016 at the very latest. I am now 18 months out with my calculations and believe the banksters can drag it out even further.

One of the many lessons I learned, which had me brainwashed until I had a really good analysis, was "there are no markets" How I missed this, is a "shame on me" moment.