While we have pointed out that 10Y Spanish bonds have deteriorated notably since the Euphoric moves recently, we have oft heard the stoic bulls arguing thus: but, but, but... 2Y is where the real action is and that's where the ECB will support them. Umm, sorry, even amid a dismally quiet and illiquid week which should see yields drifting lower as they roll gently down the curve, 2Y Spanish bond yields have retraced 50% of their rally from last Friday and are comfortably back above 4% once again. Perhaps, slowly but surely, the realization that for it to get better, it has to get much worse is taking hold - though obviously US equity holders have yet to get that message.
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