Italian banks are gasping for air. Note the ascending cone price formation in the MSCI Italian index. This shows increasing volatility.
And its trend following kryptonite. Higher highs then lower lows. Yuk.
So how go German banks?
Nicht so gut.
Here's Deutsche Bank. Note the 13 year support trend line break.
(For more German banking detritus, you can see Commerzbank here.)
That's a whole lotta technical ugly goin' on from bellwether DB. Without being ZeroHistrionic, it's more-than-faintly Bear Stearns-ish. I remember it well. Lived right through that running our fund.
Could get a little bumpy for giddy US stocks.
I don't have BBerg access for quotes on German CoCo bonds, but they are quite the brilliant shade of leading indicator canary yellow. They are a useful carbide lamp to illuminate this unfolding systemic stressor.
And finally we reach the title of this post in a scenic preambulatory thoroghfare.
The 2yr Bund stages a sharp rally:
The slope of this rally is still strong, but less sharp a short pop 'n drop move. Second, note the key resistance trend line. Break it and higher odds of an unwind is underway.
The issue is the ill's of Deutsche Bank and the cost to the German economy/Bundesbank to bail the financial Hindenberg.
Coupled this with the institutionalized, common sense, and conventional wisdom of the Bund safe haven trade. Which has been in play for a number of years now.
Its the EU's US Treasury. Kind of.
Until its not.
The ills of DB and Commerzbank coupled with the Bund's One Way, Flight-To-Quality trade
Quite the deadwood tinder pile.
And I smell smoke.