Treasury yields disconnected (lower) late last week from the ebullience of stocks and while EURUSD managed to spike on the Greek hope (in a perfect reflection of last week's Spanish bailout market reaction), it is now also disconnecting (lower) from equity exuberance in the US (having totally round-tripped from its opening spike lows on the 1st exit polls last night). European stocks are ending near their lows, credit markets notably underperforming (in another almost perfect echo of last week's early market reaction), and while Spanish sovereign bonds are performing the worst, the rest of Europe is also pulling wider in spread and higher in yield. Swiss 2Y rates are down 3bps more at 34bps (and 5Y rates are down 2bps to -3bps - lowest ever on record!). Italian and Spanish stock indices are down over 3% led by financials (which leaves them both lower from pre-Spanish bailout), with only the Swiss and German indices managing modest gains on the day.
It appears only US equities remain a) 'hopeful' or b) 'ignorant' of the new reality...
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As European credit markets react in the same way as last week to renewed hope (orange ovals), credit is fading rapidly while stocks traverse sideways - we would expect stocks to revert lower (in abso0lute or relative terms)...
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and European Sovereign bonds are all bleeding...
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as Italian and Spanish equity markets are now notably red relative to their peers since the Spanish Bailout weekend...
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Charts: Bloomberg