Wonders Of Dysfunctional Credit Markets

While I have been keeping an eye on the anti-stressed Europe, the markets got a tiny bit of reminder yesterday.

The economic news-flow from Europe was not very encouraging either this morning, I am quoting here from the "New York Morning Comment" by Nomura, among others:

Germany: Industrial production increased less than expected by 0.1% m-o-m in July (Consensus: 1.0%; Nomura: 0.8%) following a 0.6% decline in June.

Germany: Exports declined 1.5% m-o-m in July (Consensus: 0.0%) after a 3.7% rise in June (revised from 3.8%). The trade surplus narrowed to EUR13.5bn from EUR14.2bn.

Spain: Industrial production rose by 0.5% y-o-y, nsa, wda, in July. On a seasonally adjusted basis, output dropped by 1.1% m-o-m.

Netherlands: Industrial production fell by 0.1% m-o-m in July following a 0.3%decline in June (revised up from -1.2%) - below consensus expectations of +0.8%.

France: The budget deficit widened to EUR93.1bn in July following EUR61.7bn in June, and was broadly in line with government targets.

UK: Industrial production growth was close to expectations in July at 0.3% m-o-m (Consensus: 0.4%; Nomura 0.2%) and manufacturing output also increased by 0.3% m-o-m.

UK: The Halifax house price index rose by 0.2% m-o-m (Consensus and Nomura: -0.5%) and 4.6% y-o-y, 3mma (Consensus: 4.4%; Nomura: 4.3%) in August following a 0.7% (revised from 0.6%) and 4.9% rise, respectively, in July.

Greece: Q2 GDP was revised down to -1.8% q-o-q from -1.5% in the preliminary release.

Portugal: Q2 GDP was revised up to 0.3% q-o-q from 0.2% in the preliminary release.

Then, approximately at a time when Dow Jones Newswires reported the success at Portuguese bond auction:

1014 GMT [Dow Jones] There is no worst time for Portugal to issue debt as risk aversion is sending spreads to new highs against bunds, says Natixis' strategist Jean Francois Robin, after Portugal sold EUR1.039Bln of bonds at sharply higher yields than previously, versus a target range of EUR0.75Bln to EUR1.25Bln. "But the flip side of the coin is a tremendous opportunity for investors to catch some yields when AAA euro sovereign debts are offering almost nothing and no carry. Clearly investors did the latter," he says.

German DAX suddenly catches un-stoppable bid. Click on chart below, courtesy of Thomson Reuters.

Well, but one also sees how others are making the wonders in dysfunctional credit markets, as per The Irish Economy blog:

Today’s story about INBS issuing €4 billion in government-guaranteed debt effectively to itself (i.e. issuing it, then keeping it on the balance sheet to use for repo with the ECB) seems a bit strange. Indeed, normally the ECB doesn’t allow this kind of thing.

It is all well there? Caixa Geral de Depositos, BCP, Espirito Santo Financial Group, Banco BPI?