UPDATE: 7 of the last 8 moves in Spanish spreads of this magnitude were followed by a more dramatic selloff within 2-3 days.
It was a good day; of that there is no doubt. Equity, FX, credit, and sovereign bond markets all retraced recent weakness in a hurry - extending some of the gains from yesterday's Nowotny nonsense. With Merkel away on vacation and unable to fade this exuberance - though the IMF did their best reality impression. We don't mean to steal the jam out of anyone's donut here but in the case of EURUSD, 2Y Spain, 10Y Spain, Italian bonds, and Italy and Spain's equity indices - today's 'game-changer' merely reverted us back to Friday's close - filling that gap. In most cases this still leaves the levels notably weaker than pre-EU-Summit - in spite of how much certain CNBC hosts 'believe'. Bt we would be unfair if we did not note the moves: IBEX/FTSEMIB +5.5%; Euro Stoxx +3.9%; Spain 2Y -87bps, 10Y -45bps; EURUSD +136pips - pegged at 1.23; Italy 2Y -89bps, 10Y -37bps; Europe's VIX dropped 1.7vols to 25.4%. The charts say it all for context here.
EURUSD ripped 200pips or so last 24 hours but looks like a stop-run to recent resustance levels and only 38.2% retracement of the recent swing lower...
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Spanish 2Y (price) - seemingly the big thing to focus on - well its back at Friday's levels and the same levels as in the crisis pre-EU-Summit...
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Spain's IBEX managed to get back to Friday but is well below pre-Summit levels still...
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Italy's FTSE MIB index recovered to Friday's close only...
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and yet Europe's VIX remains notably above Friday's close...
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and while Credit did tighten - expectedly so - it remains significantly less sanguine that stocks across Europe - with some give back into the close...
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and just in case you are interested in the history of moves like this...
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7 of the last 8 times we saw a compression in yields on 10Y like this - the next few days saw a larger decompression occur...
Charts: Bloomberg