Despite the valiant attempts to create something from absolutely nothing in the last few minutes of the European week (to wit Hilsenrath's Bernanke story and ECB bond 'corridor' rumors), Europe fell back from its hope-ridden highs this week. Spanish 5Y CDS broke back above 500bps, as did its 10Y spread to Bunds - giving back 10 days of 'gains' - while the exuberant front-end closed the week basically unchanged (but 40bps higher in yield from Monday's best levels). For context, Spanish bond spreads remain well above the peak crisis levels of last November - having bounced perfectly off them on Monday. European stocks ended today with small gains but all red on the week with Spain's IBEX -3.4%. EURUSD gained 200pips on the week as Fed QE hope faded and we suspect the re-appearance of EU pain repatriated more EUR - though it was playing catch up to swap-spreads also.
European stock markets this week...
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Europe's sovereign bond risk this week...
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but Spain has now retraced the last 10 days' gains in risk... (lower pane is CDS, middle is spread to bunds)
and for context...Spain never really got 'safe'
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and Spain's front-end has slid notably in the last few days..
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