European Stocks Plunge, Catch Down To Credit

Tyler Durden's picture

Yesterday it was all fixed, Cyprus was storm in a teacup, and as Barroso noted "the worst of the crisis over." It appears reality sunk in today as PMIs continue to disappoint and Europe's banking system implodes. Credit markets and financials have been flashing warning signals for a few weeks and once again European stocks (led by financials - mostly Italian - cough BMPS cough) were limit down and halted everywhere (with the broad EU bank index -3%). Italy's FTSEMIB is now -0.8% on the week (giving back all of yesterday's exuberance and some) and Spain is close behind. European sovereign bonds retraced their gains and ended slightly wider on the day. Swiss 2Y rates dropped (on safety bid) to -2bps (ahead of Bunds at 0%). EURUSD bucked the 'weak' trend and strengthened on the day back up to 1.2850 while Europe's VIX pushed back up to 21%.

 

 

and the implicit bid in European sovereign bonds is evident when compared to stocks and the EUR... (perhaps the market is slowly realizing that OMT is 'conditional')... EURUSD (orange), Spain Stocks (green), Spain Sovereign bond spread (red)...

 

and of course, EU Macro data continues to slump...

 

Charts: Bloomberg