RSS feedeurozone
’May Day bank margins
Charts via Nomura’s European bank analyst, Jon Peace:
(T = 1993 in Japan, 2007 in US/eurozone, T = years)
Related link:
The looming crunch de crédit – FT Alphaville (2011)
That was your eurozone lending retreat,
When PSI is futile (but then again, Cyprus)
Here’s a nice, Portugal-themed chart from Gabriel Sterne of Exotix.
Only 15 per cent of a eurozone sovereign’s debt not held by senior creditors or by banks whose public recapitalisation would cancel out their write-downs — in two years’ time.
De-euroisation chartpalooza
In the recent years, the financial crisis has led to a marked deterioration in European financial integration…
You might say that’s a statement of the obvious from the ECB’s latest report on financial integration in the eurozone.
De-euroisation is (still) de problem
Or, imagine foreign holdings of eurozone sovereign debt turning back the clock some 15 years… to before there was a eurozone.
A few charts from Rabobank on Friday (click to enlarge):
The first pair of charts make the point that this is via foreign holders selling into the LTRO-related buying by sovereigns’ domestic banks.
Normalising subordination, in Portugal
Something you will never ever read in an IMF report on Greece…
But there it was on page 25 of the Third Review for Portugal, out a week or two back.
It’s the kind of thing that makes Portugal just a very interesting call in the crisis – beneath the second bailout? debt restructuring? second bailout then restructuring? stuff flying around at the moment.
IMF to ECB: see you after the easing
From the IMF’s full April 2012 World Economic Outlook, just out at pixel time…
The ECB has some room to further lower the policy rate, given that inflation is projected to fall appreciably
Bringing the debt home, Italian and Spanish banks edition
Hold the phone… something very interesting in the Spanish banks <=ECB=> Spanish sovereign nexus came up at the end of last week.
Suggesting that it’s in better shape than the Italian version of the nexus.
Masochism
And yes — broken transmission mechanism on display here. Still.
Related link:
Masochism – FT Alphaville (2011)
Collateral withdrawal symptoms
The Spanish bonds mini-crisis continues this week, so we thought we’d mention an excellent note penned by JPMorgan’s Flows & Liquidity team last week.
It touches on this theme of Spanish banks being less able to manoeuvre their balance sheets into more purchases of government debt.
Raison d’etat and leaving the euro, by Jurre (aged 11)
The eurocrisis is a big problem. I think about solutions.
Here is why we at FT Alphaville think Jurre Hermans’ proposal for (or subtly ironic warning of the costs of?) a Greek eurozone exit is absolutely brilliant. Brilliant in its brutal honesty about what eurozone exit,
The PMIs, the ISM, the S&P 500, and the sand in the face
On Monday, the US did the playground equivalent of kicking sand in Europe’s face, picking up all the toys, and then running away laughing.
After some rather glum manufacturing PMI figures were released for the eurozone for March,
Waiter! There’s a central bank in my CAC
We missed this last week, from the (deep breath) Economic and Financial Committee (EFC) Sub-Committee on EU Sovereign Debt Markets.
Something to read if you’re planning to buy a eurozone sovereign bond after 2012…
Eurozone manufacturing looking glum
Eurozone manufacturing PMIs were out Monday morning making a sad frowny face, with the earlier flash estimate of 47.7 confirmed for March. The composite output index, that also contains services activity,
O tempora! O mores! O Irish promissory notes fix
Pacta sunt servanda
- Olli Rehn, noted scholar of Latin (‘pacts are binding’)
If you’re just tuning into the great Anglo Irish promissory notes dispute between the European Central Bank and the Irish government …
A technical recession in the eurozone?
A couple of quarters of falling output is all it takes.
On Thursday morning, a flash estimate for March’s purchasing manager’s index suggested that the eurozone is in recession. The composite output index was 48.7,
I see the periphery (sort of) in Treasuries…and convexity
Real rates, to cut a long story short. Treasuries should be returning to trade inversely to equities, although stocks didn’t soar on the two days this week that bonds have slumped.
While eurozone sovereign debt did improve.
Those new Greek bond yields…
Update — Aargh maybe we do have to stay up. Reuters has a Greek official bandying round a nearly 95 per cent participation rate figure. Also see the FT’s update below.
Looks like FT Alphaville New York won’t have to stay up until the wee hours of Friday morning after all — from the FT:
Fitch on who’ll tap the LTRO
A nice visualisation from Fitch of which countries’ banks accounted for most net new liquidity provided by December’s first three-year LTRO, ahead of the second liquidity op this week:
Mostly the Spanish and Italians,
The people and austerity
*IRELAND TO HOLD VOTE ON EU FISCAL COMPACT, KENNY SAYS
Market seems not to like this… though wasn’t referendum or renegotiation risk always inherent in the treaty? (Cf. Monsieur Hollande.)
In terms of the Irish political set-up…
The worlds inside a Greek GDP warrant
Let’s start by saying you’re a bondholder mulling Greece’s PSI offer this weekend. (Or you’re Maynard, after a hellish week, reflecting on the offer that you helped to create.)
Remind yourself…
a) You’ve read on the front page of the FT that eurozone creditors are turning Greece (still an OECD state!) into an economic protectorate.
An (EFSF) credit derivative is born
Anyone remember the EFSF’s ersatz CDS?
They announced it back in November 2011. Another measure to eke the bailout fund’s resources out a bit more in a bad patch of the eurozone crisis.
A societe anonyme would be hived off the EFSF,
Eurogroup maths
So the deal is in, and it combines bigger private sector “voluntary” haircuts (53.5 per cent of face value, as opposed to 50 per cent agreed in October) with the ECB passing the profits from its Greek bondholdings onto the national central banks,
‘Deal is done’
Reuters quotes two sources saying a deal is done with a nominal PSI haircut of 53.5 per cent, or more than the 70 per cent net present value previously discussed:
Another official confirmed that the financing would total 130 billion euros with the aim of reducing Greece’s debts from around 160 percent of GDP now to 121 percent by 2020,
Dash for trash, Hellenic edition
Amid the bailout suspense, the Athens stock index chugs higher…
Though Societe Generale’s equity quant analysts took a pop at it on Monday:
If the definition of a bull market is a gain of 20%
The case for ECB debt certificates
How much will be tapped at this month’s ECB three-year LTRO operation?
Estimates are increasingly being revised lower.
One reason is that there are plenty of indicators to suggest that funding taken at the last operation in December has yet to be invested and that excess liquidity prevails.
ECB seniority and dirty hands
First, do read Dan Davies’ bailout options post if you haven’t already. It’s like a Greek Kobayashi Maru. Except you have no hope of ending up like James T Kirk. We got to number 5.
But speaking of Greek debt situations where there are no good outcomes left…
QE-lite in Hungary
It’s understandable why the introduction of a two-year collateralised credit facility as well as the expansion of the range of eligible collateral accepted by Hungary’s central bank, the Magyar Nemzeti Bank (MNB),
Bailout 1.3 (maybe)
It seems instructive to filter the direct quotes uttered by the various ‘officials briefed on preparations’ in this Reuters story on the promised second Greek bailout being delayed….
“There are proposals to delay the Greek package or to split it,
The Juncker statement
“What, you people thought I was joking about the €325 mil and a promise from Samaras not to renegotiate terms later? Then watch this.” – JC
Okay, that’s not what was said in the statement from Jean-Claude Juncker cancelling Wednesday’s meeting of eurozone finance ministers.
Latest eurozone downgrade…
That eurozone finance ministers meeting set for Wednesday…
You know, the one that represented the final, final deadline for Greece, dictating a weekend of rioting and a political crunch in Athens…