Italy's Worst 5-Days In 6 Months
It's all good. That's what Monti says about the political 'vacuum' being left behind. Sure enough those cagey bond chaps did not like the news and with Italian and Spanish bond spreads now wider by 40-50bps in the last 4 days, and Italy seeing its worse 5-day run in over 6 months, one could be forgiven for believing some semblance of sanity was returning to pricing in Europe. But no. Stocks, on average, ended the day nicely green - buoyed by a surge in the US into the European close. Spain and Italy's stock markets did drop but regained a lot of the loss by the close. Credit markets (IG, HY, and financials) remain notable underperformers - just unable to muster the enthusiasm of equity holders into year-end. Europe's VIX rose to 17.4% - breaking back north of the US VIX (after recoupling last week). EURUSD is going out unchanged from Friday's close - having traded 50 pips lower early last night.
Italian spreads are at one-month wides, broken above their 50DMA, and have seen the biggest 5-day widening since early April 2012... but apart from that - all is well.
and while credit markets remain far less excited, stocks push higher...