EURUSD sold off back to retrace 50% of its post-EU Summit spike gains but thanks to a mini-ramp-fest in the last 30 mins of the European day, spiked back up nicely into the green for the day. The same was evident in Italian and Spanish sovereign bond spreads which had leaked ever so gently tighter all day until the last 30 mins where they compressed 5-7bps more - still hardly a ringing endorsement of the game-changing moment of last week (and still wide of their initial spike tights of Friday morning). European equity markets gained on average around 1% (with France and UK underperforming) - again helped by a late-day surge of risk-on-ness (which was miraculously evident in US equity markets also). Oil prices continue to surge (with Brent over EUR80 once again) and we suspect are as much a driver of correlated risk-on as anything else but perhaps most importantly - away from the squeeze fest in every other asset class - Swiss 2Y rates are pushing back lower once again back under -30bps (down around 4bps today) as it is clear that a bid remains for safe-havens (gold and silver also surging) despite the optics of improving spreads on sovereigns and a 10% rally in bank stocks (which remember will need to be 'resolved' before the ESM can step in at par).
Swiss 2Y rates have done nothing but fall since the weekend - now back at a 50% retracement from the spike of Friday and pushing back under -30bps...
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EURUSD spiked off its 50% retracement into the EU close...
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and while sovereign spreads continue to leak lower, we note that both Italy and Spain are stil wide of their initial spike tights from Friday morning...
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and Brent has caught up (relatively) to WTI's excitment and is trading back over EUR80 once again...
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Also interestingly, Italian and Spanish bonds have underperformed CDS quite notably in the last few days - it seems the squeeze was clearly in CDS - we would expect basis traders to step in soon at these levels and buy CDS protection against long bond positions to lock in the 90-100bps spread (which has been a big enough margin in the past)...
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Charts: Bloomberg