Best Day In 5 Months As Europe Soars On Second "Bill Issuance" Catalyst In One Week

While many are celebrating the all-clear again as Spain manages to sell Spanish bills to Spanish banks at a huge risk premium to the last time it did the same, it is perhaps not surprising to hear that this was the biggest gain for the broad European equity market since November. What concerns us most is the absolute schizophrenia that the market is undergoing as the swings in European (and for that matter US) markets is extremely reminiscent of the absolute chaos that reigned last summer as markets suddenly flip-flop +/-2 standard deviations. The sad fact is how quickly our memories [7](or the algos that surround us) forget just last week we saw the same - exact same - euphoric response to Italy managing to sell short-term Italian bills to Italian banks (again at a significant yield premium to their prior attempt) and the mainstream-media's irrational pump that this is somehow important or noteworthy (remember even Greece managed to sell short-dated bills during the middle of its PSI discussions). European equities are back to pre-NFP levels (same as last week) and credit markets have snapped tighter today (just as they did last week as they got squeezed). This time, however, financials are lagging still and the squeeze in credit is not as hard as overall they remain less ebullient than equities. Sovereign spreads are following the same path as last week also, Italy and Spain yields compressed - though we note that they remain (especially Spain) notably wider than last week's rally. Will the rest of the week play out in a similar manner to last week? As longer-dated auctions and financials weigh heavily on risk sentiment?

European equity markets see biggest gain since November after also seeing biggest fall since November just a few days ago...

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