Daily Musings and Music of a Euromarket Professional

Uncomfortable as it may be, being aware of sitting on a time bomb shouldn't keep us from being able to laugh about it - and to listen to some music!

Daily musings of a euromarket professional

Friday 16 March 2012

16 March 2012 – “Easy” (Commodores, 1977)

It' striking that among the 15 most read BBG news a third was related to mugging the Muppets or other bankers' conscience wringing about pay and merit, sports or, amazingly, the drinking behaviour of flies with a bad amorous karma. Note another third was devoted to China buying USTs, staging its own version of political Ides of March or the wrangling between government and local officials about stat data. Otherwise, not much to write home about. Maybe it’s the fitting mood for these first sunny days of Spring that makes people careless and easy.

Anyhow, US equities managed to wring a little more into the close with the S&P taking the 1.400 level (not a major chart level, that would have been 1.361, as it is, but round figures always look better), a level last seen in May 2008 (hence pre-Lehman). Similar levels for the other US indices, with the Nasdaq, albeit Apple-driven, on Nov 2000 levels. Nice equity decoupling from the rest of the world, one has to say. Asia about positively flat, with China clawing back on earlier losses this week, but still below last week’s close. Rebound taking copper along. Commodities about stable, (noisier) WTI $1.5 lower, Brent unchanged, Gold tick better.
Flat European open in credit and stocks and Bunds getting this week’s accustomed pressure with 10 YRS to test the 2% area. Treasuries weak throughout the week, too, on risk on sentiment (Hit 2.35% y’day from 2.000% last Friday). Further stops triggered late morning / US pre-open, once the 2% broke.
Hard to be safe haven, once not needed anymore. No European data, so morning session drifting until US open and its raft of figures.
US CPI as expected (+2.9%, ex +2.2%). IP was flat (+0.4% fcst, but prior flat revised to 0.4%. Zero sum.), Capacity U 78.7% (78.8% fcst), Michigan confidence a bit on the low side at 17.3 (after 75.3 and 76 fcst). Still levels of late 2010 to Q2/2011 and among the high print since Lehman collapse. E
EUR firmer. European equities up 0.5%. Bunds collapsing.

No sovereign supply today. EFSF announcing issues for next week (Long end benchmark Monday, EUR 2bn 6m bills Tuesday, 5 YRS Thursday). EFSF preliminary 2012 funding plan. March: Ireland EUR 2.8bn, Greece EUR 7bn). Q2: Ireland EUR 2.3bn, Portugal EUR 7.8bn, Greece 10.9bn. Q3:EUR 7.7bn total. Q4: 11.3bn. Thus quite some EFSF supply until summer.
After Italy yesterday, Spain published 2011 debt figures (EUR 735bn, of which about 20% in the regions, less controllable by the central government.  68.5% of GDP, from 61.2% a year earlier and above expectations).

New issues running slow Friday with AFD EUR 1bn 5 YRS MS+55 and Mercialys (running French retailers Casino’s retail property and shopping centres) EUR 650m 7 YRS MS +205 for its inaugural. It’s been a busy week in EUR for corporate deals, which all fared well.
After yesterday’s Madrid EUR 650m 3 YRS at Spain +200, Aragon is jumping on the same bandwagon. Still quite a discount for Spanish regions, compared to Spanish GG names like ICO, which price around SPGB +50s.

ECB deposits up over EUR 40bn to EUR 728bn from EUR 686bn. Spare cash…
VIX closed about stable at 15.4 and began the day down to 14.4. It’s lowest level since June 2007 (Highs were 80 in Nov 2008, then spikes at 46 in May 2009 and 48 and 45 in Aug and Oct 2011).
Oil static to a bit lighter at 105.6 / 124.2 for WTI and Brent (from 106/126) until rumours of concerted US and UK emergency oil stock releases cost a dollar to both, closing 104.4 / 123. Gold steadily sideways at 1648.
Baltic Dry again up to 874 from 866.

10 YRS yields: Germany 2.05% (+7 bp), Swaps 2.45% (+7 bp), Finland 2.46% (+6 bp), Luxemburg 2.47% (+6 bp), Netherlands 2.55% (+7 bp), Austria 2.96% (+6 bp), France 3.01% (+5 bp), EFSF 3.26% (+6 bp), Belgium 3.30% (-3 bp), Italy 4.85% (-1 bp), Spain 5.18% (+1 bp)
Spreads: Swaps +38 (-1), Finland +41 (-2), Luxembourg +42 (-1), Netherlands +50 (-1), Austria +91 (-2), France +96 (-2), EFSF +121 (-1), Belgium +125 (-11), Italy +280 (-8), Spain+313 (-7).
Had a nice yield / credit story shift, pivoting around Core EZ-, about unchanged, Bunds and Core EZ+ crashing and the periphery running high again.

On the week:
-                    All easy
-                    Had EUR 1bn 10 YRS issued by Luxembourg and EUR 4bn 20 YRS by Belgium, next to auctions
-                    10 YRS spreads: 10 YRS swaps +38 (-6), Finland +41 (-3), Netherlands +50 (), Austria +91 (-14), France +96 (-14), EFSF +121 (-11), Belgium +125 (-35), Italy +280 (-23), Spain+313 (-6).
-                    Yield-wise: Germany 2.05% (+26 bp), Swaps 2.45% (+20 bp), Finland 2.46% (+23 bp), Netherlands 2.55% (+26 bp), Austria 2.96% (+12 bp), France 3.01% (+12 bp), EFSF 3.26% (+15 bp), Belgium 3.30% (-9 bp), Italy 4.85% (+3 bp), Spain 5.18% (+20 bp)
-                    Bunds weak. Core EZ+, just as week. Austria, France and the EFSF hanging in there. Belgium doing great after its 20-year deal that rounded up half this year’s needs. Italy, fine as well. Spain remains a bit wobbly here.
-                    2 YRS BKO were 0.15% last week, now 0.33% (+18 bp), 5 YRS OBL were 0.78% last Friday, now 1.07% (+29 bp). So we’re getting some bear steepening here. Compounding a mix of flight from quality, stops and inflation jitters. Ouch!
-                    Credit 119 (from 133 or 10.5% stronger), Financials 191 (from 211 or 9.5%) and Sovereigns down to 225 from 353 (after exclusion of Greece CDS from the index).

-                    European equities +0.9% (from 2519) and the S&P +2.3% (from 1373). Credit again much stronger than equities this week.
-                    EUR 1.318 from 1.311. Has totally lost its risk on / off (temporary) barometer function. One more jobless…
-                    Baltic Dry 874 from 824 (+6%).
-                    VIX 14.9 from 16.7. Another jobless indicator…
-                    Oil 124.7 / 106.00 from 125.9 / 107.50 (-0.9% / -1.4%). Gold 1654 from 1700 (-2.7%). Copper 389 from 385 (+1%). CRB 316 from 318 (-0.5%).

All very easy and relaxed. Greece? Seemingly over, forgotten and digested. Auction on payout on Mon (USD 3.2bn outstanding CDS) Growth? Ah. Someone will manage to trigger it off. Equities? So cool. In case of double-guessing, explain that dividend yield is so much better than bonds, kept low by the CBU around the globe. Spain, renewed wildcard for trouble.

Next week: All in all not much macro data, nor sensitive sovereign auction to kill the mood. Markets might be driven by technical factors and / or charts. Might be interesting to check Draghi’s press conference next Thu on rate outlook, pulling the plug on liquidity support, rampant Target 2 imbalance questions and how to juggle divergent France / Germany and rest of EZ price pressures.

EFSF show of force in bill, 5 YRS and long end sales. But low sovereign supply. Portuguese bills tend to be a non-event. Rarer German 10 YRS ILB auction. Let’s see if inflation fears trickle in here. Greece CDS auction on Mon.
EZ PMI and Ind order Thu. Germany PMI Thu. France PMI and Biz confidence Thu & Fri. Italy Ind Orders and Sales Mon and Retail sales Fri.
US housing data throughout the week. Jobless and leading indicators Thu. Japan empts until mid week. Chinese property prices on Sun and PMI on Thu. Need to watch out for both.
Monday: Not much crispy, but China property.

Click link on title or below for today’s musical support:

Thursday 15 March 2012

15 March 2012 – “The Ides of March” (Iron Maiden, 1981)

Nothing exciting outside the title, I’m afraid. Flat US open, flat Asian session, flat European open. No data to chew on, no major drama, positive nor negative. We noted a further bout of weakness at the open in Core EZ+ bonds, which came and went, came again and ended once the USD session started on a slight back foot. Equities on equilibrium for most of the morning.
What came out on European data was sad at best: EU car registrations down 9.7% in Feb, EZ employment a tad lower, labour costs higher than expected at +2.8% (YoY, vs. 2.5% fcst). In the European periphery things are still tense: Spanish house prices crashing (-11.2% YoY), Greek Q4 unemployment has shot up to 20.7%, Italian government debt is at an all-time high at EUR 1.935bn.
All rather non-enjoyable news, but, markets have become pretty blasé with regards to bad news. Still, Bunds tanked, as did UST in late US trading yesterday. Bit of bond recovery at US flat open, but thing mostly unchanged despite US figures that were all a tick better than expected. Then again, given the levels attained, markets will need real hard positive news to lurch further forward.
The Spanish EUR 3bn auction fared well. Yield about unchanged, smaller sizes for 3 tranches, higher BC ratio. But tails of 20 cts and more showed quite a discount between average price and lowest accepted yields. Still, no sweat. France’s auction went without hick-up, too, for EUR 8.5bn of 5 YRS, as well as 2 and 4 YRS. 5s at 1.78% against last month’s 1.93% result. Limited excitement. LTRO still a balsam for periphery debt.
Oh, and the IMF signed off EUR 28bn for Greece. Still exactly haven’t heard who gaps what’s missing.
Fitch putting the UK on negative outlook? Bah. Those 100-year bonds will just be issued some other time…No more weaker than Bunds.

New issues pretty much as uninspiring as the rest.  EUR 1bn 10 YRS BNPP in covered is noticeable, as this would be the first French 10 YRS CB deal in a while coming in the double digit area. Bits and pieces on the SSA side, but nothing major.
We noted Comunidad de Madrid announcing some 3 YRS (Mmmh. LTRO!). Would be the first public Spanish regional deal in ages. Another sign of market normalization.

As expected, ECB deposits came down to EUR 686bn (from EUR 816bn) with the start of the new reserve maintenance period.
VIX 15.3. What else in a non-volatile world?
Oil static to a bit lighter at 105.6 / 124.2 for WTI and Brent (from 106/126) until rumours of concerted US and UK emergency oil stock releases cost a dollar to both, closing 104.4 / 123. Gold steadily sideways at 1648.
Baltic Dry again up 1.3% to 866. Daily rise and shine.

10 YRS yields: Germany 1.98% (+3 bp), Swaps 2.38% (+1 bp), Finland 2.40% (+4 bp), Luxemburg 2.41% (+1), Netherlands 2.48% (+5 bp), Austria 2.90% (+3 bp), France 2.96% (+4 bp), EFSF 3.20% (), Belgium 3.33% (-5 bp), Italy 4.86% (+2 bp), Spain 5.17% (+2 bp)
Spreads: Swaps +39 (), Finland +43 (+2), Luxembourg +43 (-1), Netherlands +51 (+3), Austria +93 (+1), France +98 (+1), EFSF +122 (-3), Belgium +136 (-7), Italy +288 (-1), Spain+320 ().
Bit of 10 YRS Bund rock ‘n roll and yo-yo, but something gotta move. Belgium and Italy holding best.

Uh. It feels really too quiet out here.
In order to fill the blanks and honour the day: Who is here so base that would be a bondman? (Shakespeare, Julius Cesar, 3.2.31).
Ok, it’s slightly taken out of context, but always good to drop a quote here and there. And I need to counterbalance the musical choice of the day to maintain reputation. Bondman, slave, bond dealer, financier. Otherwise, just ask Greg.

Friday: Again nothing major in Europe on the data front. US CPI (ex +2.2% fcst), IP (+0.4% fcst) , Capacity (78.8% fcst), Michigan confidence (76 fcst).

Click link on title or below for today’s musical support:

Wednesday 14 March 2012

14 March 2012 – “Lonely At The Top” (Randy Newman, 1970)

Strong risk on opening, continuing yesterday’s rally and a very strong US close with the Dow finally hurdling the 13k mark for good and a (mainly) positive Asian session, although Chinese indices traded sharply lower. Mastering a soft landing in China remains juggling growth issues, mostly international-related, as well as commodities and inflation while balancing the bubbly property market. At it seems the choice looks like keeping the latter in check and experience with other steering means than simply re-opening the liquidity tap. Odd decorrelation of the other Asian bourses, taking their lead off European and US closes.
Further support coming from the FED (Yes, we’ll provide cheap cash for another 2 years). US mortgages lower, import prices lower than forecasted, deficit wider.
Uneven to slightly negative US open dampening European equities, but credit still pushy with Financials back through the 200 mark and Main revisiting early Feb 2012 lows / early Aug 2011 levels. 125 area a bit of chart resistance to credit strength, as would be the 190 mark for Financials.
Doesn’t look like markets care much about the EUR these days, at least not as stress indicator anymore.

It is duly noted that the new Italian 3 YRS auction went well (EUR 5bn at 2.76%, against 3.41% a month ago) and that levels have come down compared to last time and now back in  Q4/2010 area. Bid to cover around 1.5 does point out to some good primary dealer support and is not yet huge, though. Still, another stabilizing market. Bene.
Had the Italian Treasury pointing out it expected 10 YRS spreads to Germany coming down another 100 bp and that it was looking to lengthen its average maturity from currently 6.8 years. Si, this would make sense. Borrowing to fall to EUR 440bn from initially planned EUR 450bn. Noted.
Talking of long maturities: UK milling issuing ultra ultra longs (100 YRS or perpetuals). Sure. With UKT 2060 at 3.38% this is tempting to lengthen duration at low cost. Might be a cheap can to kick down the road for a long long time. Should rather be of good quality to withstand the lengthy process, though.

Had missed corporate new issues yesterday. Came in force today with books reaching billions within 2 hours and taking pricings lower (Roche EUR 1bn long 6s @18[Uufff!], Telstra EUR 1bn long 10s @, Saint Gobain EUR 750m 10 YRS @140) Belgium taking SSA centre stage with a new EUR 4bn 20 YRS deal. Here again NIP rather restricted.

ECB deposits jumping EUR 816bn to close the reserve maintenance period. New one starting today, ending 10 Apr, should see amounts dropping substantially.
VIX levels stabilizing below 15. New normal or market belief that central banks united (CBU) will forever provide funds and combat slippage?
Oil reluctant to join the party and about stable at 106 / 126 for WTI and Brent. Gold less shiny and down 3% to 1645 level.
Baltic Dry again up 1.5% to 855. Not that this one is wildly and widely tradable, but up 32% from its decades’ low at 647 early Feb looks like a nice rally. Then again it came crashing down from an intermediate 1930 high mid Dec and a post-Lehman as well as past 2-year average of about 1600-1700. So that sharp correction from December on cannot be seen as simply innocuous and seasonal.

10 YRS yields: Germany 1.95% (+14 bp), Finland 2.36% (+11 bp), Swaps 2.37% (+10 bp), Luxemburg 2.40% (+9), Netherlands 2.43% (+11 bp), Austria 2.87% (+2 bp), France 2.92% (+3 bp), EFSF 3.20% (+9 bp), Belgium 3.38% (+2 bp), Italy 4.84% (-5 bp), Spain 5.15% (+2 bp)
Spreads: Swaps +39 (-7), Finland +41 (-3), Luxembourg +44 (-5), Netherlands +48 (-2), Austria +92 (-11), France +97 (-11), EFSF +125 (-5), Belgium +143 (-12), Italy +289 (-18), Spain+320 (-11).
Germany + Core EZ+ again taking a mega beating (+14 bp, after +6 yesterday) on end of crisis behaviour with Bunds. Austria and France coming through the +100 mark to Bunds and BTPs through 300.

It does feel lonely at the top, doesn’t it? Of course, there’s relief and there’s liquidity, but, hmmmm, the air seems thin up here.

Thursday: Nothing major in Europe. Maybe Italian debt, Spanish housing prices or Greek unemployment could reveal the state of things. EU new cars. US PPI (+2.9 ex fcst) , jobless (+357 fcst), Philly Fed (+12 fcst)
Auctions in France and Spain. Spain touchy these days, as tightening has run out of steam lately.

Click link on title or below for today’s musical support:

Tuesday 13 March 2012

13 March 2012 – “I’m Sitting on the Top of the World” (Les Paul & Mary Ford, 1952)

Joyful European opening, tracking a better US close against the afternoon levels as well as a decent Asian session. Not much in terms of opening macro / micro news with the exception of Spain getting away with a 0.5% cut imposed by fellow Eurogroup members from its widened deficit targets (5.3% versus an attempted 5.8% renegotiation versus a previously agreed 4.4%). New tone is that things should be right by 2013. Ah…3%? Sure. Stress averted. But such revisions do have a déjà-vu taste and the late SPGB widening, especially against Italy, is a reminder that markets have become wary of post-election revelations.
Bundesbank risk provisions markedly up to EUR 7.7bn (from EUR 3.6bn last year) on counterparty risk (SMP& LTRO).
Mid-morning ZEW figures out of Germany showed a split picture with current situation assessment below consensus (37.6 vs. 41.5), but with forward-looking economic sentiment very strong at 22.3 against expected 10 (coming from .5.4 in Feb, -21.6 in Jan and -50s during Q4/2011). Current situation actually moving the other way round and at 37.6 back to Q4 levels. CPI figures for FR, IT & SP on consensus.
CAC and DAX trading new 2012 highs, Euro Stoxx 0.75% from it in the morning, then joining the new 2012 highs party. Back to Aug 2011 levels, which were post highs of the FED QE1 induced rally starting in Mar 2011. Italian stocks sideways, as for the rest of the year. Spain still off highs.
US figures by and large as expected or slightly better, with past retail sales revised upwards, leading to a positive US open and taking Europe along for the ride.

Greece to be funded through 2015 after the bailout, as stated by the Greek FinMin. Greek new benchmark 2023 and 2042 bonds trading lower to hit yields of 19%, respectively 14%. That compares to Portugal trading 13.5% and 10.5% on similar maturities. 2 YRS Portugal 15%.
SovX credit index getting a huge boost from the exclusion of Greek CDS from the index, hence the jump.

The Netherlands sold EUR 2.8bn 3 YRS at 0.62% vs. 085% mid Jan), hitting 38% of the targeted 2012 refinancing. Italy sold EUR 12bn 3 and 12m bills without problems at 0.49% (vs. 1.55% mid Feb) and 1.40% (vs. 2.23%), B/C ok, if not great. Belgium sold EUR 3.25bn on the same maturities at 0.19% (vs. 29%) and 0.59% (vs. 0.89%, mid Feb). BC likewise ok. Record low for Belgian 12m bills. All is well in the EZ…

New Issues showing again a mixed bag of goodies, ranging from KfW’s EUR 4bn 7 YRS deal at MS+ 3 and a new ICO EUR 1.5bn 4 YRS for a periphery agency, to covered bonds (this time Nordics) via DNB’s EUR 2bn 10 YRS EUR and financials (this time Spanish with Santander)(a reversal of yesterday’s supply).  Good flow of German sub-sovereign / agency FRNs in EUR and GBP. Not much corporate action.
New Issue Premiums have strikingly come down throughout asset classes. All pricings look fair, but none generous. Certainly a sign that spare cash is shoving through the streets.

ECB deposits down to EUR 795bn from EUR 798bn.
VIX still crashing to 14.7 at EU COB, 15.5. Now nearing April 2011 14.6 lowest point since Jan 2008. Average below 13 between 2005 and Summer 2007. All good here. Tail risk? Uh?
Oil correcting yesterday’s patch of softness with WTI & Brent trading 107.20 / 126.50 (+0.8-0.9%). Gold unchanged 1698.
Baltic Dry again up with 844 from 837.

10 YRS spreads: Swaps +46 (+2), Finland +44 (unch), Luxembourg +49 (unch), Netherlands +50 (-2), Austria +103 (-8), France +108 (-6), EFSF +130 (-3), Belgium +155 (-10), Italy +307 (-7), Spain+331 (+3).
Yield-wise: Germany 1.81% (+6 bp), Finland 2.25% (+6 bp), Swaps 2.27% (+4 bp), Luxemburg 2.31% (+5), Netherlands 2.32% (+5 bp), Austria 2.85% (-1 bp), France 2.89% (-1 bp), EFSF 3.11% (+2 bp), Belgium 3.36% (-4 bp), Italy 4.89% (unch), Spain 5.13% (+10bp)
Germany trading off on risk on, as was Core EZ+. Core EZ- and especially Belgium catching up. Spain still weakish.

Ain’t much to chew on these days. Countermovement to Monday and Friday’s slight weakness. Sitting on the top of the world and looking for direction, if not guidance.

Wednesday: Pretty much empty slate on the eco figures front. Will get EZ CPI expected +2.7 YoY (same as Jan) and IP expected at -0.8% (from -2%). In the US, mortgages and import price. Japanese IP, capacity and tool orders.
Will see what the FED has to say, but expectations of QE3 hints just seem too early at this stage.
Italian New 3 YRS auction (3.41% mid Feb, now trading 2.70%)

Click link on title or below for today’s musical support:

Monday 12 March 2012

12 March 2012 – “Wuthering Heights” (Kate Bush, 1978)

Europe starting on a slightly softer footing, having taken in the Friday late evening acknowledgment of ISDA that the Greek PSI was indeed a credit event. Need to check out the diverse fall-outs of the net USD 3.6bn or so of outstanding CDS. Obviously, some protection sellers might be more exposed than others.
Other overnight / weekend news were the decades record-breaking trade deficit of China, which in turn might push the POBC to further RRR cuts and to attempt to keep the Yuan weaker (from a mid Feb record low of 6.294). Currency wars, part 27? Obviously the case for everyone complaining the Yuan was undervalued might become harder to fight. By and large, crisis come, crisis goes, the EUR at over 1.30 is probably only helpful in keeping imported commodity inflation somehow in check. Still, at nearly EUR 96 a barrel, Brent is trading at an all-time high.
Not much on Monday morning’s macro figures slate to drive markets. Equities off about half a point; Credit Indices softer. EUR down 200 pips from Friday noon’s high spirited “Who really cares about the Greek default? We all knew it was coming” 1.33 high. Bund futures only marginally higher, though. Mid morning recovery to about unchanged levels and then back to opening levels.

Greek exchange officialised at 96% (voluntary + CAC) for EUR 177.25bn. Stating, as did the Greek FinMin, that markets have understood that the swap is the “unique choice, the smart and profitable choice” might have not have been necessary, though. Don’t rub it in… EUR 130bn to be granted by the Eurogroup. The IMF package pitched over the weekend might be on the low side. And weekend eco press all certain that we’ll see a third sequel to the Greek bail-out.

Not much official buzz today, be it on Greece or other subjects, but tension is in the air on subjects ranging from French presidential candidate pitches, the Spain deficit target story or Germany’s view about deficit management (of others). Greece was certainly a good Eurogroup cement, but it would be dangerous to assume that the subject is behind and to start bickering. Someone will come and check the height of the firewalls at some stage and any sign of European disunity could trigger double-guessing and double-checking the resolve to stand as one. Anyway, Wed is Eurogroup day.

Had some sovereign supply with Luxembourg issuing a EUR 1bn 10 YRS deal. Price level by and large in line with German GG KfW, as were already past Luxembourg transaction. Obviously a non-recurrent issuer, this pricing puts it in the Core EZ+ Finland & Netherland vicinity (rather than Core EZ- France and Austria).
German 6m bill auction eventually paying (some) yield at 0.05%. B/C 1.6, EUR 4bn issued with EUR 507m retained.

New Issues starting the week with a rather nicely mixed platter ranging from SSA (EUR 1bn Lux), (Nordic) senior financials (EUR 500m Pohjola 5 YRS @118) and (Spanish) covered bonds (EUR ) next to corporate names Heineken and Luxxotica. Heineken’s nearly spontaneous EUR 8bn book showing once more the attraction of good household names with down to earth goods, which investors can identify with. Sort off…

ECB deposits now under the EUR 800bn mark at EUR 798bn. The ECB bought EUR 27m sovereign last week, with EUR 1.5bn maturing. EUR 218bn to sterilized via 7 days deposits. Already deleveraging???
VIX crashing to 15.5 from 16.8 at European close Fri, levels last seen in early Summer 2011.
Commodities by and large about unchanged to a bit softer. Friday morning levels. Brent / WTI / Gold 124.8 / 105.9 / 1697.
Baltic Dry once more up 1.6% to 837 from 824. Still has catch-up room.
10 YRS spreads: Swaps +46 (+2), Finland +44 (unch), Luxembourg +49 (), Netherlands +52 (+2), Austria +111 (+6), France +114 (+4), EFSF +133 (+1), Belgium +165 (+5), Italy +314 (+11), Spain+328 (+9).
Yield-wise: Germany 1.75% (-4 bp), Finland 2.19% (-3 bp), Swaps 2.23% (-2 bp), Luxemburg 2.26% (), Netherlands 2.27% (-2 bp), Austria 2.86% (+2 bp), France 2.90% (+1 bp), EFSF 3.09% (-2 bp), Belgium 3.40% (+1 bp), Italy 4.89% (+7bp), Spain 5.03% (+5bp)
Germany well bid, Core EZ+ bid, Core EZ- less bid, periphery wider. Spain theme getting tense again. Yields back above 5%.

Mildly tensed day, again, but in low volatility environment. The levels reached lately are to0 high to press further, int the void without a real positive trigger. On the other hand, market participants seem to close their eyes and wish real hard there’s no trigger to test the downside either. At least, as long as the world’s central banks remain next to the liquidity tap. Then again, Core EZ bonds well squeezed, so it’s not like people are relaxed. They’re not.

Tuesday: DE ZEW survey (fcst 41.5 vs. 40.3), FR CPI (0.5% vs. -0.4%), IT CPI (0.2% vs. 0.2%), SP CPI (0.1% vs. -1.7%).
Might get people checking out the BuBa 2011 report and listen to Weidmann thereafter. Yes, that Target2 story… Eurogroup in the morning.
Bill sales in Belgium, Italy. Dutch 3 YRS (at 0.635%, not really LTRO fodder...)

Click link on title or below for today’s musical support: