European Bank Swaps Mixed

Conclusion: Risk widens for Spanish banks and compresses for Greek Banks week-over-week.

Below we include a portion of a product offering from our Financials’ team, the Weekly Risk Monitor for Financials that tracks CDS across global banks. The table below covers major banks throughout Europe and the trend week-over-week was mixed, widening for 20 of the 39 reference entities and tightening for 19. Importantly, we highlight tightening in CDS for main Greek banks and widening in Spanish banks w/w.

Our attention remains acutely on the health of each of the PIIGS due to their volatility and contagion effect across the continent. As a point of reference, foreign exposures to Spanish banks are 4x higher than to Greek banks, or $989.8 Billion versus $252.1 Billion, according to the latest data from the Bank of International Settlements.

We closed out of our short position in Italy today with the Italian etf EWI immediate-term TRADE oversold.  We remain bearish on Italy's fiscal positioning for the intermediate-term TREND, and we'll look to re-short on strength.

We remain long Sweden (EWD) and short the Euro (FXE) in the Hedgeye Portfolio with the EUR-USD oversold in a trading range of $1.34-$1.36. The EUR-USD partially took a hit today on news that Germany’s West LB bank failed to reach an agreement on a restructuring model as Germany looks to sell the lender by year-end under conditions imposed by the European Commission.

Matthew Hedrick

Analyst

European Bank Swaps Mixed - B1

European Bank Swaps Mixed - B2