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  • Irish crisis averted – for now

    Alexander Gloy

    Huge sigh of relief after Ireland managed to sell EUR 1.5bn fresh debt today (how much of that was bought by the ECB?). Irish CDS tightened 28bps to 275. Still, spreads are elevated, and it would be ludicrous to assume that more debt could cure an indebted nation. The European periphery had generally lower bond…

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  • European periphery on fire

    Alexander Gloy

    The European periphery is on fire. While German 10yr government bond yields declined to 2.33% (-0.06), Irish were unchanged at 5.31% and Greece widened to 10.67% (+0.19). Credit Default Swaps widened on Italy (from 130 to 200 within 2 weeks), Ireland (from 200 to 300) and of course basket-case Greece. Ireland will try to sell some…

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  • Friday 13th – predictions for the next 13 years:

    Alexander Gloy

    It’s Friday 13th, so here’s how things are going to pan out over the next 13 years: Greece is a tragedy. On May 7th they were already priced for a 30% haircut, and the banks prohibited it. So instead of dealing with EUR 210bn in debt (300bn *.7) they will be looking at 450bn in…

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  • ECB intervening in Irish Government Bonds?

    Alexander Gloy

    Stock markets falling word-wide, bond markets surging (prices up, yields down) – except a few outliers, like Ireland. Take a look at the intra-day yield of 10 year Irish government bonds; big rise, then sudden stop. Rumors of ECB having stepped in and buying Irish government bonds. To me, the chart looks like those rumors…

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  • What happened to the PIIGS?

    Alexander Gloy

    What happened to the PIIGS (Portugal, Ireland, Italy, Greece, Spain) – they have disappeared from the headlines recently, but there seems to be “life” coming back to bond spreads. Today 10yr spreads to Germany widened in France (+3bps), Italy (+7), Spain and Greece (+14 each). Credit Default Swaps for several countries and some of their…

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  • How much longer will stocks be able to ignore signals from the bond market?

    Alexander Gloy

    FOMC (Federal Open Market Committee) met today, announced the reinvestment of maturing mortgage-backed securities into longer-dated Treasury bonds (2-10yr). Fed language unchanged (“to keep interest rates low for an extended period”), but economic outlook a bit gloomier. Bonds rallied, with US 10yr yield down to 2.78%, but stocks closer lower. This is logical, as no…

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  • IMF talks with Hungary suspended

    Alexander Gloy

    The IMF on Sunday suspended talks with Hungary over disagreement on 2011 budget deficit (Hungary wants more than 3.8%, IMF says 3% max). Hungary had asked for EUR 20bn from IMF, EU and World Bank in October 2008 after other sources of financing dried up. It is highly unusual for a country to let negotiations…

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  • Are Italian banks failing stress tests?

    Alexander Gloy

    Bank of Italy Governor Mario Draghi said he was “amazed by the fantasy” of a press report today saying that stress tests of the country’s banks showed that three of the nation’s biggest lenders may need to raise 25 billion euros in additional capital. Draghi said at a press conference in Rome that stress testing…

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  • A failed auction at the ECB spells trouble

    Alexander Gloy

    The European Central Bank just experienced a failed auction. A failed auction means that you did not achieve to sell a predetermined amount of securities to the market. Here, the ECB wanted to mop up EUR 55bn in liquidity (to “sterilize” a similar amount of European government bonds they bought) and received bids for less…

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  • Joke du jour: Greece to tap markets for more money

    Alexander Gloy

    “Greece will go to the markets mid-July, issuing T-bills of three, six and twelve months,” Deputy Finance Minister Philippos Sachinidis told Reuters. Wasn’t the EUR 110bn bail-out meant to prevent Greece from having to raise money in the market until 2012? And isn’t their fiscal consolidation program “ahead of the plan”? Seems that is not…

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