Forget for one moment that the region is mired in a recession-to-depression state; wipe from memory the faltering capital base of the EFSF/ESM mechanisms; dismiss the overnight failure of a Greece agreement; ignore Schaeuble's dismissal of any joint-and-several liability; all you need to do is buy in Europe. Buy dips, buy rips, buy bad news, buy good news - s'all good. Sovereign debt spreads continue to compress on the week - Portugal -99bps and Spain -26bps for example (and GGBs soared on buyback hope). Equity and credit markets have just gone 'Birinyi-rule'-like from lower left to upper right this week without pause or contemplation. Whether EURUSD dips or rips, whether oil prices dip or rip; you buy risky stuff with both hands and feet. Meanwhile LTRO-encumbered bank spreads are underperforming and Swiss 2Y rates deteriorated today.
EURUSD is invincible... since as we noted previously - it's all about the Fed/ECB balance and expectations for Spain's request [6]
[7]
as are stocks and credit...
[8]
with European Stock indices charging...
[9]
and European sovereigns are on a roll too...
[10]
but LTRO-encumbered bank debt is underperforming...
[11]
Is JPY weakness and Treasury weakness now inferring correlated risk-on everywhere? Or is it just a holiday/illiquid week where the algos are in charge?
Charts: Bloomberg