Since last Wednesday, European financials have seen credit spreads widen dramatically. After some initial gains today, they once again retreated and traded out to their widest levels in two weeks as both financials and non-financials closed wider and at their worst levels of the day in European credit. Sovereigns also deteriorated significantly after around 8amET with 10Y BTPs for instance adding 20bps or so to close unch (as the rest of the major sovereigns saw de minimus +2 to -4bps changes). Bunds and Treasuries stayed close together and we note TSYs rallied 7bps (from +4 to -3bps) from early morning Europe trading and leaked off a little into the close. WTI is holding above $100 even as Copper is down 1% while Gold and Silver's gains are in sync with USD's modest losses - though EUR is leaking back lower (holding just above 1.32) into the close to around unch. While this post-Thanksgiving Day rally was perhaps predicated on global growth (US decoupling, China soft landing) and extended by LTRO (contagious bank insolvency runs risk containment), the underperformance of banks' credit risk in the last few days should be very worrisome with Senior unsecured credit wider by over 30bps in 3 days, its largest deterioration in two months.
[9]
Senior and Sub financials (red and blue respectively) underperformed once again and trade wider than the wides of Friday. Stocks (dark blue) are holding on to gains but we have seen this before as we note investment grade (orange) and high-yield (black) are also leaking back wider.
[10]
Senior credit spreads are at two-week wides and have seen the biggest 3 day deterioration in over two months. The spread between LTRO and non-LTRO banks continues to widen.
[11]
Belgium and France lifted their short-bans and rather unexpectedly we saw financial stocks rally on that news (??) but credit continues to slide rather dramatically wider.
[12]
Once again CONTEXT [13]has pulled back from over-exuberance (FX carry and Treasuries look like biggest culprit) with the green ovals showing the reconnections to a longer-term CONTEXT and ES in this same post-NFP print region 1340-1350 for the ES.
Charts: Bloomberg