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Summarizing The "Reasons" Behind The Latest Overnight Risk Melt Up

Greek riot resumption? Debunked European bailout rumor? Spain downgrade? Apple miss? Failed German Bund auction? Continued freezing in the interbank market? No, none of these are enough to dent risk appetite overnight, driven one again exclusively by the EURUSD, which has picked over 100 pips overnight. The driver? THe same old that always drives the EUR higher: hopes, rumors and hopes that the rumors are true. Here is Bloomberg with a summary of reality and the opposite, lately better known as "capital markets."

  • Treasuries are lower coming into the New York session following yesterday’s Guardian report that Germany and France have agreed to boost EFSF by EU2t.
  • German finance minister Schaeuble told lawmakers the bailout fund may be increased to a maximum of EU1t, according to Financial Times Deutschland
  • Bloomberg’s Sovereign Debt Movers is dominated by Northern European names including Finland, Germany and Denmark, the 10-yr yields of those nations rising as global  stocks, risk currencies and the euro gained
  • U.S. Consumer prices probably climbed 0.3% in September, smallest gain in three months, economists est. ahead of today’s report
  • While French banks have the most to lose in a potential Greek default, moves to expand rescue efforts or recapitalize banks at government expense adds to pressure on French finances, placing its top credit rating at risk
  • Bunds extend losses after the weak 10-yr auction which even the authorities acknowledge is due to nervousness in the mkts.
    • Germany sold EU4.1b of 10-year bonds, less than the maximum target of EU5b, the Bundesbank said.
    • The central bank got bids totalling EU4.55b, it said
    • Auction today shows “increased nervousness of the mkt,” the Federal Finance Agency said