US hedge funds bet against Italian bonds

Not that. This is not business as usual in the markets. I am well aware that Italy has some above-average shortcomings in its public sector. This was an accident waiting to happen, in hindsight, and just needed a trigger.

 

I notice yields of government bonds of Portugal, Spain, Greece, Ireland and Italy all show similar long term trends:

Portugal

http://www.bloomberg.com/apps/quote?ticker=GSPT10YR:IND

<img src=http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=GSPT10YR%3AIND&img=png \img>

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Ireland

http://www.bloomberg.com/apps/quote?ticker=GIGB10YR:IND

<img src=http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=GIGB10YR%3AIND&img=png \img>


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Greece

http://www.bloomberg.com/apps/quote?ticker=GGGB10YR:IND

<img src=http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=GGGB10YR%3AIND&img=png \img>

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Spain

http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND

<img src=http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=GSPG10YR%3AIND&img=png \img>

 

302bps to bunds now; 10y yield at 5.685%

It ain't getting any prettier.

 

Hmmm... Go long 10y Greece risk, short 10y Italy risk?

 

Lots of that been happening in Spain-Italy. It's been pretty violent.

 

Can you really default? It's like saying you can't shut off the generator w/ the PIIGS on their death beds, because if you put out anyone of them, they are all going to short circuit each other and create a disaster.

IF ANYONE of those countries default, you will see an AVALANCHE. Spreads will widen, DOLLAR will erect hard, and a gigantic collapse WILL TAKE PLACE.

The market just naturally must show the risk in the BOND market, so I suspect this is all it really is. If it's such an easy short, then why isn't the pot and bus filled to the brim yet?

They can easily squeeze a rall out of it, if that were the case. I don't see what the fuss is, as this situation of DEBT has started to eat EVERYONE, even the USA away.

 

322bps to bunds now; 10y yield at 5.84%

This is now getting downright fugly.

 

I think we can safely say that the odds that Bunga Bunga Boy has permanently blown up the EMU are exceeding 50% now, and that's quite generous on my part. I don't see how this situation can possibly be sustained.

And of course there has been not even a whisper of anything that could be done by the FinMins so fuck it. This definitely is a real horrorshow (as opposed to the Greek horrorshow which was a fake one).

Edit: Yield touched 6%. I'm glad I'm not Italian (or Greek or any PIIGS inhabitant). Central Europe ftw.

 

And the ECB SAVES THE DAY! About time.

 

No, this is an erroneous rumor... ECB IS NOT IN THE MKT.