Europe's Riskiest Bonds Rally Most In 3 Weeks To 2 Year Low Spreads

Peripheral bond spreads have rallied for 10 of the last 11 days. At a mere 269bps, Spanish bond spreads are the lowest in 2 years; Italian spreads (at 240bps) are the lowest since July 2011, and even Portugues bond spreads compressed 15bps today to near 2-month-lows. Since mid-July, it is clear that hot-money flows are charging into peripheral European bonds and not into US equities. European stocks (mostnotably the worst economically) have also risen (Greece +21%, Spain/Italy/Portugal +11.5%) but most recently it is the bonds that have seen the major flows.

The Great Rotation...

as Bond spreads in Europe collapse...

The Dash for Trash moves to Europe...

It all makes sense somehow... 10Y Italian debt is now only 45bps 'riskier' than 30Y US debt...

Charts: Bloomberg