Peripheral bond yields are soaring in the first trading session following the solving of the EU...

Peripheral bond yields are soaring in the first trading session following the solving of the EU debt crisis. Italian 10 year BTPs  42 bps higher to 6.78%. Spain +32 bps to 6.07%. Already written off by anyone other than EU bureaucrats, but still of interest, Greek 2 years 310 bps higher to 151%. The FT's James Mackintosh reckons the rate prices in a hard default by March.

Comments (7)
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
    Yes, that is the question ... when do Greek bonds become a hard default? Mar/12 ..... maybe, but would have thought it would be even sooner than that.
    12 Dec 2011, 11:55 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1800) | Send Message
    Interestingly the rise also coincides with reduced purchasing by the ECB which was described in an earlier currents article.


    I guess price controls don't work unless you can commit unlimited capital to the process.


    If you buy at the higher yields and sell at the lower yields to the ECB then you have a capital gains machine. It's a dangerous game of chicken for all involved.
    12 Dec 2011, 12:05 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
    Good observation. And very likely some hedge funds and deep pockets are doing exactly that .... buying at higher yields and dumping later to ECB when they intervene at lower yields. For great capital gains. It sure looks like that is what Soros had in mind with buying MF Global's EU debt in bankruptcy.
    12 Dec 2011, 12:50 PM Reply Like
  • marpy
    , contributor
    Comments (1705) | Send Message
    The EEC (Merkel and Sarkozy) seem to be quite stuborn - The markets keep having to kick their rear ends to get them to move forward. They were told what was expected during the summit yet could not get there which means that they are still both passengers on the S.S. Titanic and choosing not to plug the leaks!!!!!!!!!!!
    12 Dec 2011, 12:27 PM Reply Like
  • Luis Riel
    , contributor
    Comments (5) | Send Message
    well that's just great
    12 Dec 2011, 01:15 PM Reply Like
  • gggunchi
    , contributor
    Comments (6) | Send Message
    Interesting how March coincides with the next Euro Summit for this new treaty to get worked out. Something to keep in mind; French Presidential Elections are in April. If Sarkozy wins reelection expect a small rally. However if the leftist candidate (François Hollande) wins, expect Germany to tell the Euro to go to Hell, as Hollande's 5 point plan for election is;


    (1) Expand to the greatest extend possible the European bailout fund (EFSF)
    (2) Issue Eurobonds and spread national liabilities across all Eurozone countries
    (3) Get the ECB to play an “active role,” i.e. buy Eurozone sovereign debt.
    (4) Institute a financial transaction tax
    (5) Launch growth initiatives instead of austerity measures.


    Points 2 and 3 might zend de Germans running back to their DM.


    The rights' candidate is Marine Le Pen, who wants the Euro to die a natural death, and would almost certainly pull France out of the EMU.



    One thing I'd be interested in, and I'm surprised no one has reported on this, but Heidelberg AG, the company that owns 50% of the world's marketshare for high capacity printing presses (for printing currency) set record sales in Q2 and Q3. I wonder who bought all these machines . . . when/if they were already delivered.


    If one country (Germany) decides to crank out a few hundred billion notes of new currency (DM2) there would be certainly a drain on the world's supply chain for the ink, paper, presses, etc. and could probably be accurately spotted ahead of time.
    12 Dec 2011, 02:33 PM Reply Like
  • Rolo
    , contributor
    Comments (143) | Send Message
    the market wants the printing press :)
    12 Dec 2011, 02:38 PM Reply Like
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