Germany is bund-ling its problems in QEuro

As I wrote yesterday, the QEuro had more to do with bailing out Germany and its banks than the PIGS.

The German 10-yr bund yield moved 28.5% yesterday with lower durations going negative yield.

Early morning in the US, showed that the bund moving 8% lower in yield hovering around 0.178%. How soon before the bund approaches zero? Early April seems likely should this binge buying by the EU and Mario Draghi continue.

The euro itself is nearing parody with the dollar, trading at $1.05 this early morning.

All this dislocation took US equities to the woodshed on Monday with the Dow and S&P 500 going negative for the year.


This afternoon after US markets close the Federal Reserve will release the second part of the stress test for banks operating in the US.

Citigroup and CEO Mike Corbat have much riding on the outcome hoping to be able to raise its stock dividend. I do not think that will happen, since the bank’s balance sheet is still in tatters, despite selling off some bad assets. Corbat may be shown the door should the dividend play not work.

Two surprising developments may arise. Goldman Sachs and Morgan Stanley may get some bad news from the capital allocation report. It seems the two I-banks have the biggest dispute with the Fed over Teir-1 capital requirements and recognition. Interested to see how that plays out this afternoon.