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Market Snapshot: European Close

Submitted by Tyler Durden on 11/30/2011 13:05 -0400

Equity and Credit markets rallied significantly on the day with credit catching up to equity's recent strength in an unusually biased move. The higher beta XOver (high yield European credit) and Subordinated financial credit outperformed close to close but lags overall relative to equity and investment grade credit, suggesting less than stellar demand to lay out new risk and more likely shorts covering in a hurry. Seniors underperformed Subs in financials - again suggesting some covering on the SEN-SUB decompression trade on the back of the ratings actions this week. Sovereign spread moves were actually largely unimpressive with spread curves flattening, some decompressing, and the fulcrum security BTPs, not exactly ripping across the curve.

This table shows spread performance (relative to Bunds) for various maturities and Sovereigns.

BTP spreads and yields are better on the day in 10Y but hardly showing that anyone is out of the woods (as this effort by the Fed et al) is much more bank survival focused than the real problem of sovereign debt.

Equities are above those 11/15-18 highs but credit is unable to break it yet. Investment grade credit is outperforming which seems like the action of tentative longs (low vol bet) as opposed to high conviction longs being set out in what are relatively much cheaper securities (in HY and sub financials).

Charts: Bloomberg

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Wed, 11/30/2011 - 13:17 | 1930933 BaBaBouy

Storm before the Hurricane ...

Need Gold, more than Ever ...

Wed, 11/30/2011 - 13:07 | 1930936 GeneMarchbanks

Worry not FrAAAustria downgrade imminent.

Wed, 11/30/2011 - 13:07 | 1930939 xcehn

Calm before the storm.

Wed, 11/30/2011 - 13:08 | 1930942 Mike2756

Sure seems like it, if this doesn't work, what's left?

Wed, 11/30/2011 - 13:36 | 1931093 gravitas

pffftt... Don't worry about the long-term. Join the crowd, and learn to think more immediate....

Christmas is saved! Go buy another new car (preferably one big enough to tow that new boat and trailer you'll also buy).

<wacky-waving-inflatable-arm-flailing-tube-man/on> Hooray! Spend! Spend! Spend! <wacky-waving-inflatable-arm-flailing-tube-man/off>

Wed, 11/30/2011 - 13:50 | 1931164 JesusUp

what's left?

more numbers

lots and lotsa numbers

Wed, 11/30/2011 - 14:21 | 1931338 freethinker4now

Storm? Thise clouds have been gathering for almost 4 years now. Longest bloody calm I've ever seen

Wed, 11/30/2011 - 13:15 | 1930944 Victorio

Game over man... GAME OVER!

http://www.youtube.com/watch?v=dsx2vdn7gpY&feature=related

Wed, 11/30/2011 - 13:14 | 1930970 Ancona

So, just how long is this damn road? By the time they get there, the can will be very nearly worn completely through!

Wed, 11/30/2011 - 13:15 | 1930973 Dick Darlington

Belgium downgrade with neg outlook on Friday sure gave nice "boost". During the 3 trading days this week since friday's downgrade Belgium 10yr bond has "rallied" roughly 80-90 bps. Fookin LOL! But wait, wait, that's not the best part. The best part is that according to various flow commentaries there has been almost non-existent "institutional" participation. AAahahahaaa! With retail flow and screen manipulation (and maybe, just maybe with a little help from ECB) one can do MIRACLES! Fellas, this has gone totally twilightzone retarded.

Wed, 11/30/2011 - 13:25 | 1931031 Mike2756

Next week is still possible for a strike.

http://www.ble-t.org/pr/news/newsflash.asp?id=5214

Wed, 11/30/2011 - 13:26 | 1931038 youngman