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’Bailouts and obsolescing bargains
The central administration lacks the management, oversight and co-ordination structures to support effective implementation and long-term management of policy measures, including structural reforms to support sustained economic growth.
Dystopia — safe assets edition
A familiar theme in this year’s Barclays Equity Gilt Study (57th edition, just out)…
(Click charts to enlarge)
But there is a twist — Barclays Capital tried to estimate the percentage of “safe”
Greece’s biggest holdout, dealt with? [updated]
Goodbye to one massive FT Alphaville bugbear, anyway? An interesting story from Stephen Fidler of the WSJ/DJ FX Trader:
The ECB has agreed to exchange the government bonds it purchased in the secondary market last year at a price below face value,
Otto’s revenge
- Parachuted in by the great powers of the time
- Specifically, parachuted in by the great powers of the time to ensure Greek payment on their sizeable official loans
- Subordinating Greek sovereignty to a German budget commissioner
- Ordinary Greeks taxed to the hilt,
The preferred, puzzling, ESM
Eurozone states signed the final version of the treaty establishing the European Stabilisation Mechanism on February 2.
(Click the image for the full document)
The ESM treaty now heads for ratification by 17 states,
The Italian bid, redux
We’re sticklers for this stuff — but it’s an important point by Societe Generale’s analysts on Tuesday: (click charts to enlarge)
There’s your exosphere-thin trading in Portugal at the moment, incidentally…
The Portugal enigma
Something to note about these Portuguese bond prices… (via Reuters)
(Other than that they dropped like nothing else on Monday)
The difference between the bid price and the ask price — a proxy of sorts for how liquid the bonds are — is enormous,
Portugal, back in the frame
Felix and Arianna want to move Davos to Patmos, but what about the Azores?
Have a look at the yields on the Portuguese 3-year…
… the widest flavour of paper at the short end of Portugal’s inverted curve,
Bilaterally — yours?
The FT’s James Mackintosh recently pointed out an interesting provision in the loan agreement Greece has with its bilateral official creditors – its fellow eurozone states.
They are entitled to require Greece to pay the whole loan back immediately if the country defaults on private bondholders.
There are official creditors, and there are “official” creditors
The unstoppable force…
“If the level of Greece’s privately held debt is not sufficiently renegotiated, then public creditors, holders of Greek debt, will also have to participate in the financial effort,” Lagarde told journalists in Paris.
UK debt: £1,003,900,000,000
Blame whoever or whatever you want, but net British debt, “excluding the temporary effects of financial interventions,” topped a trillion pounds sterling in December.
That’s equivalent to 64.2 per cent of GDP.
Death sanitised through credit
Or, what kind of risk the ECB’s three-year LTROs are putting on.
Two charts — click to enlarge:
They’re from the European Central Bank’s latest monthly bulletin, which actually came out last week.
Flight of the kangaroo
Back in December, we wrote about an interesting little ripple effect in the Australian bond market from the fragility of AAA ratings in the eurozone. Top-quality euro ‘supranationals’ such as the European Investment Bank or France’s CADES — the biggest foreign issuers of Australian dollar kangaroo bonds – might fall out of the market.
See, ratings do matter
Note three year Portugese paper on Monday…
The yield topped 18 per cent just before pixel-time, with Portuguese sovereign debt generally suffering after the S&P downgrade on Friday.
Portugal has seen worse.
RBS on those S&P downgrades
A quick summary of Jacques Cailloux’s thinking on the Euro sovereign debt downgrades — Caillou being chief european economist at RBS…
The market implications of the ratings review are worse than a whole downgrade of the region owing to the increased political wrangling,
Downgrade Friday
RTRS-SENIOR EURO ZONE SOURCE SAYS S&P SET TO DOWNGRADE SEVERAL EURO ZONE COUNTRIES LATER ON FRIDAY, GERMANY IS NOT ONE OF THEM
Dealing with Greece’s biggest holdout
If you didn’t believe us that the European Central Bank will do everything it can to achieve seniority for its Greek bonds in the country’s debt restructuring, hopefully Thursday’s ECB press conference convinced you.
Hungary — “the Commission remains preoccupied…”
Making an extraordinary story of bailout conditionality even more extraordinary…
The European Commission warned the Hungarian government on Wednesday that it’s ready to go to the European Court of Justice to argue that a new constitution violates EU law.
To ring-fence the ECB in Greece… or not
There was a nice line in the FT’s latest story on Greece’s debt restructuring:
Questions are also being raised about the ECB’s estimated €45bn of Greek sovereign holdings. Collective action clauses are likely to be introduced into Greek bonds by the PSI deal,
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.
Hungary for junk?
Gosh, Hungary divides sentiment. (It has also, just as we went to pixels, been stripped of its last investment-grade rating by Fitch.)
Despite our saying not once but twice that Hungary isn’t running out of money in its current crisis,
Hungary — the good, the bad, and the conditionality
Hungary — still in basket-case mode earlier on Thursday… (a snapshot courtesy of Bloomberg):
The government sold 35 billion forint ($140 million) of one-year bills, 10 billion forint less than targeted,
The Italian bid
Apparently, the European Central Bank bought unusually large amounts (at least €1bn) of Italian debt on Thursday. Just as well?
Stefano Di Domizio of Lombard Street Research wants more:
Screaming call for the ECB to step up bond purchases
The above is a chart by Di Domizio showing how Italian bonds’ bid-offer spreads have diverged from the yield spread to German debt.
A Magyar martingale
(We mean martingale, the betting strategy, not the quant model!)
Here’s the thing about Hungary, as we see it anyway. If you look at things like the current account, for example, it says “fixable by the IMF”.
Eurout
Will get coat, but in the meantime consider this intraday chart from Reuters…
To put this in some historical perspective, the Euro is now back to where it was almost exactly 12 months ago versus the dollar,
Keep calm and call the War Loan
(Alternative title: Financial repression meets the History Channel?)
Telling the UK government to issue 100-year bonds clearly wasn’t out-of-the-box enough for Societe Generale’s rates strategist Julian Wiseman.
“It is a big number…”
Some of our regular readers may have been under the impression that, in the age of digital media, post-newsprint, it had become unnecessary to simply fill empty space in the absence of news.
Nah.
From Bloomberg’s Keith Jenkins and Anchalee Worrachate: