Contagion Continues With Belgian CDS Spreads Surging Following Weak 3/6 Month Bill Auction, EURUSD D

[Joanne98]

The sovereign widening wave continues to push away from the periphery and deeper into the eurocore. While yesterday it was Italy's turn to see its spreads surge, today it is Belgium. At last check the country of monk ale and fries is flirting with 200 bps, following a 3/6 month auction of €2.8 billion bonds which was (not very) surprisingly weak: the 3-month T-Bill auction for €1.425bln came at a plunging bid/cover of 1.48 vs. 3.52 previously even as the yield jumped to 0.864% from 0.784% previously, while the 6-month €1.370 billion Bill also experienced a slump in its bid/cover of 1.54 vs. Prev. 2.67, yielding 1.000% vs. 0.901% previously. Net result widespread widening, with Italy once again taking the head at 25 bps wider to 272 bps (see chart). The bad news is that the EURUSD has once again collapsed to below 1.30, after which the next stop is John Taylor's (and certainly not John Stolper's) 1.26 target. The only good news is that just like in the US, stocks continue to be resilient in the face of massive sovereign onslaught. This will not last, to quote Market News: "Brokers suggest there is a degree of asset re-allocation taking place, where shares have become a relatively less risky asset class, while Eurozone government bond yields have ballooned. It's an interesting idea, but also looking at yield returns, you could argue that funds may start to flow from equities to government bonds in Europe given that yields have become quite comparable." In other words, very soon the Fed will need to "stabilize" not only US stock prices but European ones as well.

EURUSD sub 1.30

http://www.zerohedge.com/article/contagion-continues-belgian-cds-spreads-surging-following-weak-36-month-bill-auction-eurusd-

[westerebus]

1. As of this evening I'm out of international funds.

I just have a bad feeling about the EU. My risk tolerance meter is stressed. That's just me.