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’Viva Espana [updated]
The Spanish auction results are out…
RTRS -SPAIN SELLS EU5.64 BLN OF BILLS VS MAXIMUM TARGET OF EU4.5 BLN
RTRS-SPAIN SAYS 3-MONTH BILL AVERAGE YIELD 1.735 PCT VS 5.110 PCT AT PREVIOUS AUCTION
RTRS-SPAIN SAYS 6-MONTH BILL AVERAGE YIELD 2.435 PCT VS 5.227 PCT AT PREVIOUS AUCTION
…
Euro rout
Brutal:
The wires are pinning the drop on this:
RTRS-EURO FALLS AFTER SOURCES SAY MERKEL REJECTS RAISING UPPER LIMITS OF FUNDING FOR ESM BAILOUT MECHANISM
RTRS-EURO FALLS TO WEAKEST LEVEL SINCE MID-JANUARY VERSUS DOLLAR
RTRS-EURO EXTENDS LOSSES VERSUS DOLLAR,
Quotes du jour – Eurofudge edition
For those of us of a certain age, the fiscal language looks to be copied and pasted from the original Stability and Growth Pact with a few bells and whistles added to imply that ‘this time we mean it.’ - Steven Englander,
Post-euro economies, charted
Crystal-ball charts via Mark Cliffe of ING (click to enlarge):
We lay emphasis on “crystal ball” given the long time-frame ING has employed, and the intense difficulty in quantifying the damage which complete break-up would cause to cross-border trade and so on.
Me like cheap dollars
A much bigger turn-out than usual from banks for the ECB’s latest operations to swap their euros for dollars:
RTRS-ECB ALLOWS 50.685 BLN DOLLARS IN 84-DAY OPERATION VS RTRS POLL $10 BILLION
RTRS-ECB
UBS doubts your eurozone contingency plan is good enough
The latest eurozone missive from UBS’ global economics team is out, and they sound worried that their earlier reports were not adequately scary taken seriously enough.
Yes, the euro is deeply flawed,
Post-euro currencies, charted
Click Nomura chart to enlarge:
Along with “redenomination risk” for eurozone financial assets, this is another of those pieces of bank research that’s as interesting for being considered necessary to be written in the first place,
Euro banknotes — the movie
Because, with the week we’ve all had… there is something strangely therapeutic in watching the printing en masse of euros — even if the printing was ten years ago. Via the ECB:
(And a full blast of the synth Ode to Joy for everyone making snide comments about needing a sequel for the roll-out of the drachma!)
Related link:
Euro *non*-redenomination risk
Amazing what you find in analyst reports on German telecom credit these days (via Societe Generale’s Juliano H Torii):
…we think investors might be waking up to the possibility of the mirror image of redenomination risk – what we will call “no-redenomination” risk (NORED) – a risk that may be severely underestimated for the German companies in our space.
Guest post: Thinking the unfolding — the break-up of monetary union
Many in the market are now thinking through the consequences of any one country (or all 17 member states) changing currencies on departing the euro. Gilles Thieffry, a Partner at GTLaw, Geneva, has perhaps been thinking it through earlier than most.
The ‘Last Days’ of the Euro
Alternative title: Why France and Germany are likely to strike a momentous deal on fiscal union sooner than anyone thinks.
Welcome back, Jonathan Wilmot.
It’s some time since we heard from Credit Suisse’s chief global strategist (and occasional FT Alphaville contributor) but he’s made up for that with a short,
The legal aspects and abstractions of a euro redenomination
And so it came to pass, that everyone who worried about whether the euros which people owed them would stay euros for much longer…
…realised that this was not a drill.
Case in point — a note by Nomura analysts published over the weekend,
Ciao, il Cavaliere
Something to hang on the toilet wall, Silvio?
Related link:
Il cavaliere’s career told through Economist covers – Economist
Euro whiplash
The Bunga Bunga euro bounce is over. The only way is down, it seems:
Source: Thomson Reuters Eikon
The currency’s litany of woes include its strong correlation with weakening euro stocks, the poor performance of recent PMIs,
What’s the hard limit to ECB hard money?
Well, it’s the ECB’s own and apparently limitless obsession with inflation, of course. Also it’s Article 123 of the EU Treaty:
Though if you’re asking about sterilising purchases of debt, as a technical limit to the central bank’s printing euros,
ECB cuts rates 25bps
Alternative headline: “faint glimmer ECB will not trash eurozone”
3 November 2011 – Monetary policy decisions
At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:
Let’s face the euro shorts and dance
Euro troubles galore and yet the euro has proved remarkably resilient in October:
If you believe the market, much of that October rally has been down to one reason and one reason only: short covering.
You shall not default, the ECB commands it
If you’ve ever read about central bankers in the 1930s objecting to countries coming off the gold standard, this post may cause a slight feeling of déjà vu…
On Thursday, the European Central Bank published its usual monthly bulletin on economic developments in the eurozone.
Mechanics of a euro breakdown
There’s been a lot of talk about the possible break-up of the euro, but until now little has been written about the actual mechanics of a euro breakdown (other than it just can’t happen, so let’s not write about it.)
But a few banks have recently dared to speak the unthinkable.
The crisis that was always coming
This looks a bit like how 2012 will turn out, doesn’t it?
European countries are at present locked into a severe recession. As things stand, particularly as the economies of the USA and Japan are also faltering,
The ‘No More Lehmans’ rally (and a mad EIB idea)
Another day, and another plan to save the eurozone.
Via CNBC:
European officials are working on a detailed plan aimed at shoring up European bank stability, according to an official who spoke with CNBC’s Steve Liesman.
Six weeks to save the eurozone
There might have been nothing concrete from the IMF meeting in Washington over the weekend, but the outline of a plan to rescue the Eurozone and its banks was sketched out.
- There would be a haircut or writedown of Greek sovereign debt of 50 per cent.
Silent SNB hypnosis
As rumours swirl in the market of a Swiss National Bank press conference later on Tuesday (the SNB said it had no comment)…
… Deutsche Bank’s Alan Ruskin chimes in with some advice for Philipp Hildebrand:
If Greece can leave, anyone can leave
Also: think about the governing law of your government bond when a currency union is collapsing. Willem Buiter of Citigroup on Tuesday, exploding a certain meme:
A Greek exit is indeed often viewed as
Sundry secret Greek liquidity [updated]
Update — See reader comment below. This may be a case of mistaken identity (or a Bank of Greece accounting change), not liquidity usage in July. We stand corrected if this is accounting changes. ELA’s not easy to spot!
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sun·dry
Adjective:
Currency basis swaps as a funding tool
Currency basis swaps are all the rage again. SocGen has even referred to the basis swap market as a key means for managing “access to short-term USD liquidity” in its “hard facts” release.
Of course,
JPMorgan’s “alternate” eurozone-free universe
JPMorgan believes a break-up of the eurozone is “very unlikely”.
But it wants you to be prepared.
The bank launched its “Alternate States” series of research notes on Thursday, which attempt to describe the probable course of improbable events.
Swiss real estate will become the new gold
Here’s an interesting view on the consequences of the SNB’s move from Societe Generale’s Sebastien Galy.
First of all, as others have noted too, Galy believes the decision to defend a 1.20 level floor against the euro is credible this time,
SNB euroquake, the analysts react – part two
… continuing the SNB euroquake analyst reaction, RBC’s FX strategy team has an interesting idea: they think the SNB might go as far as buying Spanish and Italian debt, in a bid to find a return for its intervention-related euro cashpile:
A Swiss “sigma” event
Or, turning the leveraged into fondue. Hat-tip to Scott Barber of Reuters graphics:
Related link:
European Central Bank response – ECB