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Friday, March 29, 2024

Summary Of All Overnight Developments Out Of Europe As Spanish 10 Year Bond Spreads Hit All Time Wides

Courtesy of Tyler Durden

Even as the world wakes up to a stunner out of Korea, things in Europe are getting worse. Here is a brief summary of all the events in the increasingly troubled continent.

  • Sinn Fein Says Irish PM Has No Support: The opposition party has tabled a motion of no confidence in Irish Prime Minister Brian Cowen (source)
  • Wolfgang Schaeuble admits the end is near: The Irish debt crisis is putting the euro at risk, German Finance Minister Wolfgang Schaeuble warned Tuesday. “We are currently in a difficult international and European environment,” Schaeuble said in a budget speech in parliament. (source)
  • General weakness in European credit: CDS indices are mixed with Xover 6 basis points wider at 465bps, HiVol 4bps tighter at 154bps and Europe 2bps wider at 104bps. Holders of 92% of the current outstanding E750 million of Anglo Irish subordinated debt yesterday agreed to accept just 20% nominal value for the paper which will be exchanged for government guaranteed securities (source)
  • Very poor Spanish 3-6 month bond auctions, with yields and Bid To Covers jumping, and the country selling (€3.2 billion) compared to the auction goal of €4-5 billion: Spanish 3-month auction for €2.091bln, BTC 2.34 vs. Prev. 2.77 (yield 1.743% vs. Prev. 0.951%); Spanish 6-month auction for EUR 1.165bln, bid/cover 2.6 vs. Prev. 2.08 (yield 2.111% vs. Prev. 1.285%). Spanish CDS about 20 bps wider as vigilantes consider speeding up the process of collapsing Europe
  • Persistent rumor of Moody’s downgrade of Portugal: probability 0.01%.
  • CHF intervention needed but nobody willing to take on Fed: The head of the Swiss National Bank on Tuesday sounded the alarm on the strength of the swiss franc and tied it to the financial turmoil across Switzerland’s borders in the Eurozone. Current exchange rate developments are a “major challenge” for Swiss exporters, SNB governing board chairman Philipp Hildebrand said. (source)
  • 3 Month Euro LIBOR, which recently passed above the ECB’s 1% key refi rate, and was seen as an improvmenet, is now back lower: When 3 month Euribor broke above the European Central Bank’s key 1% refi rate last month it was heralded as a sign of a return to normality, but it has fallen back over the past eight trading sessions. Three month euro LIBOR failed to make the 1% level and is now declining again. On Tuesday, three month euro LIBOR fell 0.25 bps to 0.97375%, sterling 3 month LIBOR fell 0.125 bps to 0.73875% and dollar 3 month LIBOR held steady (source) Elsewhere, three month Euribor fell for the eighth consecutive day Tuesday, with the pace of decline accelerating as it dropped 0.4 basis point to 1.035% from 1.039% Monday. The 3 month Euribor/OIS spread widened 1.25 bps with the banking sector under pressure amidst heightened concern over euro zone peripherals (source)
  • Lastly, the ECB drained €66.0Bn In a 1-week term deposit tender, to sterilize the money used for sovereign debt purchases. The amount drained matched the total volume of government bonds purchased by the ECB and settled as of last Friday and was up from the €65 billion drained previously. On Monday, the central bank reported that it had purchased €713 million in sovereign debt on the secondary market during the week ending November 19. (source)

 

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