European stocks popped at the open and then generally trod water for the rest of the day. The initial liquid-driven surge had no follow through and in fact European sovereigns bled wider most of the day - with Greek govvies now down almost 10% (in price) in the last week. Credit markets re-racked along with stocks - with XOver outperforming and Main (investment grade) underperforming (along with financials). The story of the day was yet another 100pip-or-so rampapalooza in EURUSD - the 3rd in 5 days - as we noted earlier [6], when everything else is shut, EUR is simplest lever to drive markets higher given the correlations (and no Treasury police to keep things under control). Despite today's push, Spain's IBEX remains -0.5% on the week (as its peers are all up around 0.5%) and Italy and Spain bond spreads are up around 15bps on the week. So with EUR up around 0.22% vs USD on the week and fulcrum securities from Spain down, take your pick on where risk is being flushed.
EURUSD rampapaloozas....
[7]
GGBs - one-way street 'no-brainer'
[8]
Spain 2Y yields bleeding... +40bps in 2 weeks!
[9]
Charts: Bloomberg