From Peter Tchir of TF Market Advisors
Well, stock futures have already had a decently volatile session. From a low of 1112 all the way back to 1142, with a couple of 10 point moves in between. Broken. I think credit markets are telling you that this is a great second chance to short stocks if you didn't last time. MAIN is basically unchanged. SOVX is 4 wider, back to 292. More concerning, since the crisis has been infiltrating the banks is that SocGen is 15 wider at 320, and BAC is 5 wider even while their stocks are trading up. Those all seem like pretty solid warning signs that stocks so far are ignoring.
The mortgage insurers, PMI in particular are in deep trouble. PMI is trading at 70 points up front (+5 on the day), making Greece look like a safe haven. I have heard PMI bonds are now trading "flat" so investors aren't willing to pay for accrued. Psychologically if nothing else, a default on this name will not do anything to help the housing market.
While some people are debating the merits and likelihood of Eurobonds, others are more concerned that the existing promised bailouts will fully materialize as each country is starting to act in their own best interests - Finland and collateral as a prime example. I think it is far more likely that the existing plans fail to materialize or help than that we get a Eurobond issue anytime soon.