ZH:

Quote:

Floodgates Open As Four More Spanish Regions Seek Bailout; German Nürburgring Faces Bankruptcy
http://www.zerohedge.com/news/floodgates....
07/22/2012

Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone."...

Euro opening a lot lower on the early quotes, threatening sub 1:21, would expect some support later, otherwise the indexes could **** out on the open...

Good. I held short eur/usd.

2nd day in a row another Spanish bond market crash...

Spain 10YR + 23 bps to new record 7.5%

Spain 2YR + 47 bps to 6.23%

Emergency - Somebody get the rally monkey on the phone quick!

ZH:

Quote:

http://www.zerohedge.com/news/spain-foll....

SPAIN STOCK MARKET REGULATOR BANS SHORT SELLING
SPAIN'S SHORT SELLING BAN INCLUDES DERIVATIVES, OTC INSTRUMENTS
SPAIN'S SHORT SELLING BAN COULD BE EXTENDED BEYOND 3 MONTHS

Germany's Fin Min To Meet Spanish Counterpart In Berlin Tues
https://mninews.deutsche-boerse.com/cont....
Monday, July 23, 2012

The yield, or interest rate, on 10-year Spanish government bonds hit 7.5 percent Monday before retreating, having breached 7 percent on Thursday — a level that many analysts fear could eventually shut Spain out of public markets and force it to seek a Greek-style bailout.

The concern, though, is that Europe would be hard-pressed to find the money to salvage an economy the size of Spain’s — the euro zone’s fourth largest after Germany, France and Italy.

Spain completed its third consecutive quarter of recession in June, according to data published Monday by the Bank of Spain. The economy contracted by 0.4 percent from the previous quarter.

Stocks in Europe followed Asian markets sharply lower Monday — by more than 2 percent — and the euro hit a new two-year low against the dollar of just under $1.21. Wall Street seemed likely to skid at the opening too, with Dow Jones industrial average futures and the broader Standard & Poor’s 500 futures down 1 percent.

Helping stoke the turmoil, representatives from the trio of big lenders to Greece are set to arrive in Athens on Tuesday to examine that country’s progress on meeting the terms of its bailout program. There are growing concerns that Greece will not be able to live up to its commitments and that as soon as September the so-called troika of lenders will refuse to dispense more money. Last Friday, the European Central Bank said it was suspending loans to Greek banks, pending the troika’s report.

The financial market pressure is reviving tensions between Spain and its European counterparts, amid growing calls from the government in Madrid for the European Central Bank to buy Spanish debt and help temper the country’s borrowing costs.

José Manuel García-Margallo, Spain’s foreign minister, said during the weekend that the E.C.B. was acting as “a clandestine bank that is not doing anything for the debt.” The minister urged the E.C.B. to deliver a decisive blow against investors “who have placed short-term bets, a bet against the euro.”

On Monday, however, Luis de Guindos, the economy minister, insisted that Spain would “of course” not seek a full bailout, having already requested up to €100 billion, or $122 billion, in European rescue money for its troubled banks. Just last Friday, euro zone finance ministers agreed to release an initial €30 billion of that loan, although that has evidently not been enough to appease the financial markets.

Before addressing lawmakers, Mr. de Guindos said that “the stance of the markets is irrational, extremely nervous and cannot be addressed by European governments.”

Meanwhile, a handful of regional governments are expected to follow the example of Valencia, which said Friday that it would be the first region tap into a new Spanish government fund to meet its debt-refinancing obligations, as well to as pay suppliers of health care and other basic services.

The government of the Murcia region said Sunday night that it continued studying whether to apply for aid from that same fund.

Officials in Madrid have been at pains to stress that the request by Valencia was precisely the sort of call for help that the regional assistance fund was set up earlier this month to address. The fund was created to help suffering regions and is to have €18 billion in capital, partly guaranteed by a loan from the state lottery company.

Still, Spain’s regions are struggling with a combined €35 billion in debt that is maturing this year. They are reaping the bitter harvest of a decade of ambitious but often unchecked spending on infrastructure and services, including unprofitable television stations and deserted airports.

The central government’s own deficit-cutting plans have fallen behind schedule, as a deepening recession has eroded tax receipts.

To counter this, Parliament on Friday approved a new austerity-budget package worth €65 billion that had been presented by Prime Minister Mariano Rajoy a week earlier. The package includes a controversial increase in the sales tax, as well as the removal of a Christmas bonus salary payment for civil servants that has triggered daily protests and road blockades in Madrid and other cities.

Spain’s budgetary and economic woes have also begun to overshadow its banking crisis. On Friday, euro zone finance ministers agreed on an interim payment for Spain’s troubled banking sector of €30 billion, a day after the German Parliament signed off on the rescue package. Spain is yet to announce how much of the €100 billion of available banking funds it will request, and how that money will be distributed. Bankia, the giant lender whose demise prompted Spain to seek help, has itself estimated its overall bailout cost at €23.5 billion.

Last week, Cristóbal Montoro, the budget minister, forecast that Spain’s economy would shrink 0.5 percent next year, compared with a previous forecast of 0.2 percent in growth.

While Spain is the current focus of market concerns, investors are also worried that Italy, wrestling with its own debt problems, and the specter of an economic collapse in its autonomous region of Sicily, will be back in the spotlight soon. Its 10-year yield was up 0.28 percentage point, in midday trading in Europe, at 6.35 percent.

Amateur/novice over here... I've got a financial n00b question/observation over here....

I've noticed it's usually a bad thing, or an act of desperation whenever a govt "bans short-selling" of their market. What's the meaning behind this, and IS it usually a last, desperate act when it happens?

Usually. It was an utter disaster for the banks when short selling of banks was banned back in 2008/2009.

It pulls liquidity and is usually the precursor to no-bid situations.

http://www.telegraph.co.uk/finance/finan....

Quote:

The Spanish newspaper El Confidencial reported sources close to premier Mariano Rajoy complaining bitterly that the crisis engulfing Spain was a “failure of the whole European Project and the incompetence of its leaders”.

There is deep shock in government circles that the €65bn austerity package passed by the Spanish parliament last week amid bitter protests across the country – and imposed by the EU – has failed to make any difference.

El Confidencial said the Rajoy team was thinking of “putting on the table” a possible withdrawal from the euro, a dramatic escalation in the game of brinkmanship between the eurozone’s Latin bloc and German-led creditor core.

All from the Greek playbook, accelerated....

65 billion euros has made no difference! Did I read that right? Is it because all that money is just going right back to the banks as interest payments?

By the time we get to the fourth of fifth country in crisis the Greece Playbook re-run ought to play out so fast the whole story to date will happen in less than a week!

ZH

Dominoes Tumbling: Catalonia Informally Requests Bailout As Spain Considering Credit Line Request
http://www.zerohedge.com/news/dominoes-t....
07/24/2012

Breaking news BBC
Governments of Spain, Italy and France call for elements of June deal on euro to be put in place 'immediately'
http://www.bbc.co.uk/news/#TWEET177273

Someone hitting the panic button?

Which elements, which deal?

http://www.benzinga.com/analyst-ratings/....

3 and 6 month bonds

Quote:

Spain auctioned bonds of both the 3- and 6-month maturity Tuesday. Spain sold 1.628 billion euros of 3-month Letras (the name for the bills) at 2.434 percent, higher than the previous auction's yield of 2.362 percent. The bid-to-cover of the 3-month Letras rose to 2.94 from 2.6. Spain also auctioned 1.46 billion euros of 6-month Letras at yields of 3.691 percent from 3.237 percent at the last auction and also with a stronger bid-to-cover ratio of 3.02 vs. 2.82.

5 Vs 10 Year

Quote:

The benchmark 10-year bond yield rose as high as 7.625 percent, a euro-era record for Spanish bonds. Further, 5-year bonds rose as high as 7.649 percent and traded above the 10-year bond as of writing. The inversion of the Spanish yield curve on the long end is interesting; yield curve inversion has historically signaled that a country is about to enter recession. However, Spain is already in a recession and debt markets are being skewed by fear.

10 yr: 7.74%
5 yr: 7.77%
2 yr: 7.11%

Yield inversion is getting extreme. How long before we see an 8 handle on one of the durations?

Edit: also, looks like we'll need an Italy thread soon.

10 yr: 6.71%
5 yr: 6.48%
2 yr: 5.20%

Might as well book a reservation for France as well.

Got Gold?

as a matter of fact...yes I do

Looks like my post marked the top in Spanish & Italian bond yields. They have been getting bought HARD ever since.

Spain:

10 yr: 7.38%
5 yr: 7.20%
2 yr: 6.42%

Italy:

10 yr: 6.45%
5 yr: 6.12%
2 yr: 4.94%

@Antone -- yeah, and no news motivating the rush that I can find... another attempt at ECB to try to quench the Bondzillas currently roaming Europe, no doubt. Their ammo must be wearing thin.

There was this thing about the recent Buiter comments on Grexit having a 90% chance to happen, thus leaving Spain/Portugal saved by EU -- doesn't seem like it would excite market participants to move the yields so much. Intervention it is.

Impressive move in any case. And surprisingly, affecting all euro-area countries.

So the drop is obviously linked to the Draghi speech, like the jump on the EUR and the spectacular euro stock market rally. Curiously, bond yields started to seriously tank in the wee hours of the morning here (8 am GMT) -- a few hours before Draghi spoke (11 something am). Did someone know something?

Look at today's move in the 10 year yield of any of the PIIGS countries bonds, and superimpose the stock index of that same country, you'll see the 3-hour delayed reaction. Just sayin'...