It's like Deja-Vu all over again. The last two days effluence exuberance in European stocks - most specifically Italian and Spanish broad indices - is extremely different from the lack-luster moves in corporate, financial, and sovereign credit markets. Yes, we know short-sale bans; we know fast-money; we know liquidity; but it is beginning to become a little farcical that equities are doing what they do with no follow-through from the actual underlying markets that 'should' benefit the most from whatever it is that the equity markets are rallying for. EURUSD ends the week perfectly unchanged from last Friday. Spain and Italy 10Y end the week down 60bps and 25bps respectively (but the gains were fading fast today - even as stocks accelerated). Europe's VIX collapsed 1.7 vols to around 21% today after being steady all week (as US VIX drops below 14%).
European Stocks vs European financial and corporate credit...
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European sovereign credit rally losing steam...
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as EURUSD ends unchanged...
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and Europe's VIX decouples once again from risk-reality...
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