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’LTRO-ing, with Magnus
Intesa Sanpaolo’s chief executive says he’ll use ECB funds to buy Italian bonds…
BBVA sells the first senior unsecured bond to be issued by a Spanish bank since October… (like Intesa a few weeks ago.
Let there be credit claim collateral… just not everywhere
Turns out that not all the national central banks of the European System of Central Banks (ESCB) are so keen on widening collateral criteria, especially the idea of taking on more bank loans (tweaking the eligibility of credit claims) in exchange for central bank lending.
‘Alles klar, Frau Kommissar’
Maybe not so triumphant, then?
Unfortunately none of our resident German speakers are in the house, but the story seems to be saying that Merkel’s success at securing a fiscal pact between 25 of the 27 EU member states is maybe not so great after all,
Powerfrau
Bild, the German tabloid, covers all the angles. Here is a (slightly odd — we don’t think it’s sarcastic…) debt crisis panegyric to German chancellor Angela Merkel:
(“She’s the German housewife who will see the work gets done before she pays”)
(H/T Raluca3000)
Though we wonder how that squares with Bild’s recent acquisition of holdings in Greece’s €14.5bn March 2012 bond.
Flash PMIs and Germany’s bragging rights
Europe must grow its way out of this slump! It’s not enough to bail out profligate sovereigns and banks! Capital must be deployed to SMEs! Youth unemployment must be tackled! Fiscal discipline is not enough on its own!
Fire all engines!!
Markit Flash Germany PMI®
German private sector sees fastest growth for seven months in January,
This crude old eurozone crisis
Bank of America Merrill Lynch’s commodities analysts have picked up that Brent crude — when priced in euros — is uncomfortably close to its July 2008 peak.
And they’ve added some interesting points:
Das transmission
Just to warm you up for Thursday’s European Central Bank policy meeting…
Though not many are expecting a rate change, Societe Generale’s Kit Juckes points out that the German two-year bond yield is close to going lower than Japan’s:
Rabobank says go Dutch
(We’ll get our coat)
Since there’s a question-mark over who’s going to buy the circa €200bn of fresh eurozone sovereign debt being sold in the first three months of 2012…
We were piqued by Rabobank’s Richard McGuire and Lyn Graham-Taylor argument on Friday that picky investors should look at the Netherlands.
Broken news on Greece and the euro
The following article from Der Spiegel was pinging around dealing rooms on Friday.
BUT IT DATES FROM NOVEMBER LAST YEAR.
Nevertheless, it has been blamed for gyrations in the money markets on Friday afternoon.
Germany sells €4.057bn of 10-year bunds
Not great, but definitely an improvement on the last German 10-year bund auction (table via Reuters):
Related links:
Eurozone GC is splitsville – FT Alphaville
Bunds get Junckered, and other repo
[Something for the weekend] A Dickens of a mess
Ebenezer Draghi sighed. These bank books would never come out right, and it was Christmas Eve already. As he struggled, the numbers began to swim before his eyes. So many hundreds of billions of euros,
Tricky cartisti
There’s a certain Italian elegance to this intraday chart of Iti 10 year sovereign debt, no?
Technical analysts might spot an upside down head with a shoulder-shrug. Maybe.
That twitch higher,
The IMF as the ECB’s unsecured borrower of last resort
News that the Bundesbank is fast approaching a zero domestic asset balance-sheet situation from a eurozone Target2 payment perspective has caused a bit of a stir in the financial commentariat space.
Critics suggest it’s largely unimportant,
Sovereign downgrades and the eurozone
As S&P decides whether to downgrade Germany and the five other triple-A members of the eurozone, RBS considers who would be hardest hit by the move other than President Sarkozy and his re-election hopes.
Fines all round?
From the new-fangled EU fiscal compact declaration:
5. The rules governing the Excessive Deficit Procedure (Article 126 of the TFEU) will be reinforced for euro area Member States. As soon as a Member State is recognised to be in breach of the 3% ceiling by the Commission,
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.
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,
Germany 1 – France 0
Danger, danger: Merkozy tape bombs exploding on Monday afternoon.
They have a deal!
(emphasis ours)
RTRS-FRANCE’S SARKOZY SAYS THE FRANCO-GERMAN AGREEMENT IS COMPLETE, WILL BE SENT TO VAN ROMPUY ON WEDNESDAY
RTRS-SARKOZY SAYS FRANCO-GERMAN PROPOSAL WILL MEAN MODIFIED EU TREATY,
Central banks move to ease European dollar crunch
Readers take note. This is a chart of the one-year German note, currently yielding less than zero. An unprecedented event according to Reuters:
So much for the much talked about flight from German bunds?
If anything,
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.
Europe’s grand bargain
Some required reading for us all.
Published in September, the authors of this Occasional Paper, who include Jurgen Stark, spell out their ideas for the future of widely abused Stability and Growth Pact.
One Eurobond to rule them all
In order to be effective, a central bank must act as a monopoly. It, just like Sauron, must control all. That’s the point.
All central banks thus routinely corner markets. If they didn’t, they would compromise their own position.
German bund watch [updated]
Thursday early price action:
Almost level pegging with gilts! Who’s the haven now? Mwahahaha.
Update: 10.44am (London time)
Two excellent charts from Scotty Barber at Reuters.
Related link:
Germany – the only first class passenger on the Titanic?
Further reflections on that German bund action fail from RBS rate guru Harvinder Sian.
He says there are lots of excuses and explanations for Wednesday’s flop ( it’s year-end for primary dealers, the bond was off-benchmark,
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 risks of sticking to über harte währung strategy
Germany’s ‘hard money’ principles and opposition to Quantitative Easing by the ECB are, more often than not, framed with reference to the hyperinflation in the Weimar Republic.
Indeed, it’s a widely accepted truth that the horrors of the Third Reich were caused by the three year period of hyperinflation between June 1921 and July 1924.
Mariano Rajoy – Europe’s quarterback
Europeans tend not to understand American football, not least because the ‘ball’ seems to rarely make contact with the ‘foot’.
But let’s hope Mariano Rajoy, the candidate expected to win Spain’s general election on Sunday,
Something for the bail-out sceptics
We won’t know until early next year how much the ECB has spent on its efforts to defend Italy and Spain facilitate the transmission of monetary policy across the Eurozone.
However, Gary Jenkins at Evolution Securities has crunched some numbers and he reckons the bank is now sitting on up to €100bn of Italian debt alone.