German Bond Auction a Disaster – Little Bid

Angela Merkel

Greek elections have dealt a serious blow to the confidence behind the Euro. The press has been touting the “official” position put out by Brussels to stay in their good graces. But this policy has resulted in serious misconceptions and misleading the institutions who buy bonds over the cliff much as Japan did to its economy. These bondholders are starting to get worried. What happens if the Euro collapses? Many are just starting to comprehend this could lead to a whole other level of the crisis – we call BIG BANG.

The results of the BundesBank’s EUR2 bn 8/46 tap are now out and it was a complete disaster. The possibility a poor result and another technical failure is just starting to sink in. The results really were real bomb.The BundesBank took up a stunning 53.1% of the offer making this the most for any German auction going back to the beginning of the Euro. The total bids were only EUR1.2 bn with an average yield of 1.07%, which was by far a record low, down from 1.77% in October last year. We warned that the trade may be sell the German/buy American.