Germany Could Be Losing Its Save Haven Status
3837 sats \ 18 comments \ @TomK 7 Oct 2023 bitcoin
Something is brewing for the german economy
Despite heightened stress in the Eurozone, Germany hasn't seen an influx of capital.
Bundesbank's Target2 (measurment of cap flows between the Eurozone central banks) claims on the Eurosystem dropped to €1,046.7bn in September.
Interestingly, the spread between German Bunds and Italian bonds grew which is a sign of liquidity stress. Italy's Target deficit also decreased to €555bn.
Could this be influenced by the ECB's quantitative tightening? The ECB's government bond holdings have reduced from €2.74tn to €2.64tn.
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54 sats \ 13 replies \ @carlosfandango 7 Oct 2023
Some really interesting things happening in the bond markets at the moment. As a more general point; are the ECB rate rises starting to bite now?
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10.4k sats \ 12 replies \ @TomK OP 7 Oct 2023
When yield spreads between I and G rise there is stress in the system. But until now I can't identify exact targets. We need to wait for clearer skies
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10.2k sats \ 7 replies \ @sb 7 Oct 2023
Wanted to shared this article about the bond market experiencing a devastating run over the last couple of years. https://markets.businessinsider.com/news/bonds/treasury-bond-yields-market-selloff-market-crashes-dot-com-bubble-2023-10
According to the article, "The bond rout is worse than the one seen in 1981 when the 10-year yield neared 16%."
Fat fingered a 10k sats zap instead, happy Saturday everyone! 😂😂
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1174 sats \ 6 replies \ @TomK OP 7 Oct 2023
Going to zap You back (or I'll have a beer, Your choice)
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111 sats \ 5 replies \ @sb 7 Oct 2023
Let's cheers to that peaceful beer, while watching the international bond market fall off a cliff in the distance :)
It really feels to me like the central banks have played with their fiat monetary system toy one too many times. Of course, I'm sure it felt this way during every major financial crisis. But this time seems different?
Do you know why the bond yields are spreading between Italy and Germany? I understand that Italy has worse debt dynamics, but is that the only reason?
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271 sats \ 2 replies \ @TomK OP 7 Oct 2023
You know, honestly: sometimes I got the impression that Italy is preparing its ''Italexit'' from the Eurosystem. It's reorganising its energy supply for example single-handed.... the bis risk lays in the balance sheets of the german Bundesbank and the banks. This can be deduced by the Target2 system. It sounds crazy but let's wait....
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21 sats \ 1 reply \ @carlosfandango 7 Oct 2023
Italys PM Meloni is very popular as a leader and does have a history of anti-EU sentiment (she encouraged Italy to leave the Euro in 2009). Italy is a county of very diverse groupings (unification is still a dirty word in some quarters) but I suspect it wouldn’t be hard for a right-wing populist to push the country to a referendum; and they seem to average one of those every two years. The financial problems that beset the country and the migration issue…. point to some very similar positions to those the UK found itself in…. And lest not mention Greece!
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22 sats \ 0 replies \ @TomK OP 7 Oct 2023
Tsipras clearly was bribed right in time. Salvini also and Maloni in my opinion too
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226 sats \ 0 replies \ @TomK OP 7 Oct 2023
Yes, let's do that.... Italy announced new public debt of around 3.5-4% this year, sharply rising. It has over 120% debt to GDP ratio, is in recession and face the next wave of migration crisis. AND: its banking sector is extremely weak. Looks like a race to the bottom between them and the others...
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0 sats \ 0 replies \ @TomK OP 7 Oct 2023
You know, honestly: sometimes I got the impression that Italy is preparing its ''Italexit'' from the Eurosystem. It's reorganising its energy supply for example single-handed.... the bis risk lays in the balance sheets of the german Bundesbank and the banks. This can be deduced by the Target2 system. It sounds crazy but let's wait....
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21 sats \ 3 replies \ @carlosfandango 7 Oct 2023
My sense is they have pushed too hard and a lot of this is caused by a delayed reaction.
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0 sats \ 2 replies \ @TomK OP 7 Oct 2023
At this stage anything is possible. We keep our eyes on the bond markets
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25 sats \ 1 reply \ @sb 7 Oct 2023
The behavior of the bond markets over the last few months have been revealing. Especially with gold and Bitcoin holding strong 👀
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0 sats \ 0 replies \ @TomK OP 7 Oct 2023
Indeed! If this trend gets steam... man oh man
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25 sats \ 1 reply \ @grayruby 7 Oct 2023
Thanks Tom. Always appreciate your econ posts, especially from a Euro lens as us North Americans tend to forget the rest of the world sometimes.
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33 sats \ 0 replies \ @TomK OP 7 Oct 2023
De nada. But be sure that the US will explode economically after this crisis again. Then You have all the right in the world to pi.. on the rest. Defend the fire of freedom and we will follow (decades later).... greets
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0 sats \ 0 replies \ @bhattaraigaurav64 7 Oct 2023 freebie
Nice
0 sats \ 0 replies \ @SaToSHiWoMaN 10 Mar outlawed
stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.