Draghi Market Response: EUR Down, Gold Down, EU Bond Yields Down, EU Stocks Down, US Stocks Surge

Submitted by Tyler Durden on 09/06/2012 09:35 -0400

• Bond
• European Central Bank
• Italy
• Reality

Perception; Independence; Conditionality; Unlimited; Fully-Effective-Backstop. Draghi 'nailed-it' on the drinking game but it seems the world is not amused. The market's reaction to the new OMT is modest EUR weakness (and more JPY weakness), practically no change from US equities (and modest weakness in European equities), Gold and Silver disappointed at the 'conditionality' and not total print-fest; and yet 2Y Italian and Spanish bond yields - which flatlined for a while, are now dropping faster and the longer-dated Italian and Spanish yields are dropping also. US Treasuries are 5-6bps higher in yield. In Summary: "Spanish bonds soaring on hope Spanish bonds will plunge to allow Spanish bonds to soar on ECB purchases" - everything else not impressed.

EURUSD rallied on no rate cut and fell on OMT reality...


2Y Spain and Italy yields were stable for a while then accelerated lower...


but European stocks are leaking lower...


Charts: Bloomberg