Global Macro Perspectives
Looks like meltdown is averted; ECB will probably announce further bond purchases on it’s tomorrows Governing Council meeting.
Portugal managed to sell €500 of 12-month bills at bid-to-cover ratio of 2.5 times despite S&P negative credit watch issued yesterday.
Waiting for another ride in a few months…
Spain, Italy and Ireland at new record highs. Markets in panic mode.
I don’t see any other way how this could be reversed (meltdown prevented) except ECB bond purchases.
Spain 10 year government bond spread vs. it’s German peer reached new high of 255 bps. Irish bond spread reached record high of 654 bps.
Markets have lost faith in EU bailout plan and are now finding out (again) that math is quite exact science. CNBC Europe has even sent it’s anchor to Lisbon to provide live coverage of Portugal bailout; they were wrong: the markets skipped Portugal and moved to big story – Spain. Spain has a funding requirement of at least €155bn in 2010. Looks intimidating, especially if we took to account the fact that Ireland was pre-funded for the first half of the 2011 and despite that needed a bailout.
This puts the markets near the point where the only solution is the Ben Bernanke way – buy worthless paper and stuff cash in monetary system. I would do it fast, but I doubt on EU leadership determination. In any case, more the ECB waits the situation will get worse.
Spreads tighter…
I’ll interrupt my blogging silence with a short update on markets. Usual service continues as scheduled on Monday.
Looks we have trading themes reversing course.
Market summary: Shanghai down; U.S. Dollar up; PIGS spreads record wide…
Irish spreads again a bit higher today. Irish government will announce tomorrow the details of Anglo Irish burial rescue. So far the bank has received EUR 23 billion of state help, tomorrow will be added additional EUR 10-15 billion. Incidental tomorrow marks two years of Irish government guaranteeing Anglo Irish debt and the guarantee is not (jet) extended. So, there is a possibility that some EUR 5.7 billion […]
Irish and Portuguese 10 year government bond yield spread versus same maturity German keep on rising. Latest rumors are that tha Anglo Irish creditors will not be paid off in full. Ireland auctioned February 2011 and April 2010 bills today; bit to cover for February bills fell from 9.4 times on previous auction to 4.1 times; bit to cover […]
New highs today for Irish and Portuguese 10 year government bond yield spread versus same maturity German. Greece yields off recent highs. ECB is not managing to put this under control. Chart 1. Ireland vs. Germany 10 Year Government Bond Yield Spread Chart 2. Portugal vs. Germany 10 Year Government Bond Yield Spread Chart 3. Greece vs. Germany […]
Irish 10 year government yield spread versus same maturity German issue rose today to new highs. Both Barclays Capital and Goldman Sachs issued their reports in the last couple of days claiming it is not clear whether Ireland can finance its budget deficit without EU/IMF help. On Friday ECB intervened buying Irish government bonds. FT story: ECB intervenes in […]
Extension of European debt problems returned as a mayor concern this week. Most notable problem is, off-course, much hyped Ireland’s banking system nationalization. Latest leg included spiting up Anglo Irish. Bloomberg: Ireland’s Burial Plan for Anglo Irish Keeps Cost Question Alive. Irish 10 year government yield spread versus same maturity German issue moved to new highs. Chart 1. Ireland vs. Germany […]
Well, the Greek government bonds are getting destroyed, Portuguese follow suit. European politicians have to send some kind of message of reassurance to the markets otherwise we could be bound for a quite of a collapse. Chart 1. Greek Government Bond Yield Curve Chart 2. Portugal Government Bond Yield Curve
All the fuss today is the markets realizing that EUR 45 billion is not enough to save Greece from debt restructuring. Looking at the yield curves markets believe maturities shorter than 2 years will be paid in full. Longer duration holders could see some principal loss in debt restructuring. Portugal off-course followed Greece lead. Markets […]
The market looks like today is just an intro. The 1.085 level broken, and technicians say the next target is 1.035 (I don’t believe in that, but since a lot of investors looks at that…). Beside bad initial jobless claims (480.000 vs. 455.000 consensus and 470.000 consensus) the main theme is PIIGS (Portugal, Italy, Ireland, […]