European Peripheral Bonds Plunge Most In A Year As Portugal Risk Flares

Tyler Durden's picture


Following a handsome bounce driven by Draghi, Carney, and various Fed officials promising moar, peripheral European bonds and stocks are having a bad day (and week). Greece, Portugal, Spain, and Italy are all ending the week lower (after solid performance mid-week) with Germany's DAX seeing the benefits of a rotation from high-beta momo with a 5.1% rise on the week (the best week in 20 months!). Safe-haven flows dominated in bonds; Bunds rallied slightly more than Treasuries on the week but once again Peripheral nations collapsed. Spanish bond spreads jumped the most in a year. Italy was notably weak, but Portugal has seen spreads jump 28% in the last 2 weeks (the worst in over 3 years!). EURUSD had its best week in 5 weeks - and despite the peripheral collapse, Europe's VIX had its best (drop) week in 4 months ending at 19%.

A huge divergence in Europe this week... (seems evident that Spain, Portugal, and Italy are being traded as one entity...)


but bonds were the big news... (in percentage terms, Portugal's move was the owrst in 37 months)


Meanwhile, in Greece, the stock-market has dropped 7 of the 8 weeks and is dramatically underperforming the supposed reality that the bond market represents...


Charts: Bloomberg

Your rating: None

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Fri, 07/12/2013 - 11:53 | 3745408 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Chill dudes, it's summer time.

Oh wait, that's when the sh-t seems to always hit the fan in Europa ...

Fri, 07/12/2013 - 11:54 | 3745410 SheepDog-One
SheepDog-One's picture

WHEW! Well thankfully we have a wizard here to fix everything no matter what, and nothing actually maters nor can put a dent in all-time record market highs....was worried there for a second until I remembered they got everything fixed and worry has been abolished. 

Fri, 07/12/2013 - 11:57 | 3745427 rosiescenario
rosiescenario's picture

The actual risk is not "flaring" is that someone finally noticed it and took action on it. That risk has been there for well over a year or two.



Fri, 07/12/2013 - 11:59 | 3745435 NoDebt
NoDebt's picture

I think the red back arrow in the Spain Bond Spreads kinda "drilled through the mountain" to get to the other side.  I also like the Greek Stocks vs. Greek Stocks chart.

Still, message received.  Another flare-up of that damned European herpes.

Fri, 07/12/2013 - 12:01 | 3745439 Obchelli
Obchelli's picture

Markets are "crashing" on this - dow down whooping 0.06%.

I think this kind of move does qualify for crash in this new bewnanka economy

Fri, 07/12/2013 - 12:37 | 3745623 SheepDog-One
SheepDog-One's picture

That's ok, they're just 'consolidating' down there at -.06% for the afternoon drive 1% higher.

Fri, 07/12/2013 - 12:00 | 3745443 hugovanderbubble
hugovanderbubble's picture

France downgraded by Peterssen to Junk Bond





-SOCGEN biggest Fraud ever to come, then Credit Agricole

Fri, 07/12/2013 - 13:17 | 3745820 disabledvet
disabledvet's picture

break up of the EU is i think imminent. "two speed Europe" is an understatement. i agree "all eyes on France."

Fri, 07/12/2013 - 12:06 | 3745444 Atomizer
Atomizer's picture

Press Briefing by Gerry Rice, Director, IMF Communications Department

Heads up..


Edit: Jerry, what if Egypt sells the new US military fleet of aircraft on the black market? Would that pull Egypt out of its financial woes?

Fri, 07/12/2013 - 12:55 | 3745709 timbo_em
timbo_em's picture

Tyler, in that last chart you wrote Greek Stock twice.

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