There is a lot of strangeness out there today - though that in itself is not so strange anymore. Spanish and Italian (and Portuguese) bond spreads rallied back to only +12bps on the week (but Spain's equity market is rolling over (down 2.5%) into the close. The S&P, Dow, and Nasdaq are all pushing unchanged on the week (ignoring Cyprus) but the Dow Transports is plunging (as FedEx is smashed lower on the biggest volume in 6 months). 2Y Swiss rates have dropped to their most negative in 2 months as safety is chased and we suspect the EUR strength (a 100 pip pop on yesterday's US close) is much more repatriation flows than risk-on confidence flows. US homebuilders are bid (+2.2% on the week) as hope springs eternal for high-beta chasing and a UK housing bailout. European credit markets have not recovered from Cyprus, while stocks... have.
EUR strength - confidence or repatriation flows...
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FedEx - huge volume plunge... Confidence inspiring... (accounting for 30 of the Dow Transports 35 point drop)
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Europe's fulcrum security - Spanish stocks sold off in the US/EU overlap...
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European credit markets are still notably worse than pre-Cyprus, but stocks - all good!!
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and the US indices are testing reality once again...
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as Homebuilders lead the way...
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Charts: Bloomberg