contagion

Pressure is mounting on Spain. The 10-year yield today is essentially back to where it was when the ECB broadened its sovereign bond purchase scheme to include Spanish and Italian bonds. On Oct 27, the 10-year yield was near 5.33%. Today it…

I think Monti and Papademos are going to try to shoehorn the standard policy responses into the situation in order to reduce the range of outcomes they have to deal with. In a practical sense, that means going with the standard formula of…

Overnight price action marked by choppy trading conditions; Most EM stocks and currencies lower, safe havens advance. North American session likely to focus on US data; Inflation expected to remain flat, industrial production seen higher.…

Risk aversion continues to weigh heavily on equity markets and EZ sovereigns; Dollar mostly firmer across the board. EZ policy developments remain in spotlight with growth expected to slow; UK inflation moderates. In the North American…

This shouldn’t be happening after this weekend’s good political news. The spread widening is weighing on France who will be on the hook for their banks who are heavily exposed to European sovereigns. Where are you ECB?

Look at this chart of the sovereign credit default swap wideners today. Every single name is European. The only one with a sub-10% default possibility is Sweden, and they are not in the euro zone. That tells you something, doesn’t it? I…

Italian 10-year yields are now down below 6.5%, that’s a full percentage point lower than on Wednesday. Market players suspect ECB intervention is behind the sizable move. Still, everyone is breathing a sigh of relief as we head into the…

We see no easy way out of the current turmoil. The result of enough fiscal austerity to relieve the debt pressures is a severe recession or depression. Historically, independent nations undergoing austerity have accompanied the policy with…

When you run through the scenarios, really the only medium term solution that makes sense is to allow the ECB to put a permanent bid on Italian and Spanish bonds. The problem with such a move is that it reduces pressure on those governments…

We are experiencing a European bond market crash. There’s not much time left. Make your trades now because a policy response is imminent; I’m thinking by Monday morning.