There was no named source, just a "High level source". Whether the market is excited about this news that would create an elite Europe and a bunch of failures or whether traders are latching onto something else, maybe the refuted IMF story, although it seems unlikely, or more likely Black Friday sales (up 16-18%), thankfully, we still have a great gap to work with.
However in the meantime, Italy issued $567 mm in inflation linked "linkers"(the target sale was $750 mm) at a yield of 7.3% which is much higher then the last issuance of Oct. 27 at 4.61%, it would seem the IMF story is NOT the cause considering the auction. The 10 year hit 7.3% and is now just over 7%-the unsustainable, bailout level.
Meanwhile the liquidity crisis in Europe is hitting multi-year (2008) highs in both dollars and Euros, despite the fact that the banks (so long as they have sufficient collateral) can borrow directly from the ECB, which raises the question, "Have they run out of collateral?" In the race to recapitalize and sell everything not nailed down, this could very well be the situation. Remember a liquidity freeze in the US was the start of the end.
From Moody's:
- The probability of multiple defaults (in addition to Greece's private sector involvement programme) by euro area countries is no longer negligible. In Moody's view, the longer the liquidity crisis continues, the more rapidly the probability of defaults will continue to rise.
- A series of defaults would also significantly increase the likelihood of one or more members not simply defaulting, but also leaving the euro area. Moody's believes that any multiple-exit scenario -- in other words, a fragmentation of the euro -- would have negative repercussions for the credit standing of all euro area and EU sovereigns.
Lets see where the opportunities will be...
No comments:
Post a Comment