Europe Opens Weak, Credit Ugly And Financials Floundering
No big surprise as Europe opens to a crowd of sellers. The EUR has stabilized from its drop a little in the last hour or so but commodities and PMs continue to slide. Italian banks appear to be bearing the brunt for now with Intesa and Unicredit down 4-5%, but most of the major banks are down at least 3%.
Credit markets appear worst hit overall with dramatic moves in XOver and Senior Financials. It is worth considering that the stresses in the financials and sovereigns are well-and-truly spreading to the non-financials - even investment grade credits - as ITRX Main ExFINLs is 10bps wider on the day at 171bps! As we noted in a previous post, Asian credit was hit hard, particularly the major sovereigns and for now S&P futures are back to their overnight lows down around 1% from the US close.
Copper is accelerating to the downside (-7.7% this week) but gold is outperforming among the metals/commodities complex even as the USD (DXY) has gained 1.8% since Friday's close.
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