Five Times Is Not The Charm For ECB BTP Intervention Today

As 10Y BTP spreads to Bunds hover around 25bps wider on the day, the ECB's bluff has not only been called but they have been the sucker at the table no less than five times already today. With the spread between 2Y and 10Y BTPs also having dropped (yield curve flattened) over 30bps, the Italian bond complex is sending some rather disturbing messages. And for all those who feel the need to blame speculators - CDS is actually outperforming bonds as real money leaves Berlusconi's Bonds in a hurry.

It seems the EUR88 line is an important level of defense - but then again so was EUR90 and EUR89 when we passed through them! More importantly, BTP spreads to Bunds are now 12bps off recent tights and 23bps wider on the day...


UPDATE: Since we posted BTPs have accelerated downwards - basically leaving all ECB purchases for the day now under water:

Chart: Bloomberg