The EUR is fading fast (-0.3% on the day) as Draghi re-iterated his commitment to lower, longer, forever, he promises... Germany's DAX was the best performer across the region today as there was a sea of green in European stocks. Even with a late-day drop, the DAX gained 2.3% - its best run in 10 weeks - as Bunds underperformed Treasuries by over 5bps on the day even as exports and production data collapsed [5]. Spanish and Italian stocks rallied but bond yields rose (and Spanish bond spreads rose around 5bps). Portuguese bonds improved around 18bps - marginally positive compared to the collapse in the last week or two - as it seems the market is not convinced that all is fixed again.
Germany's best day in 10 weeks...
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but bonds were not following through on the equity strength...
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as it seems today was as much a stop-hunt above a quiet friday's highs as anything else...
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Charts: Bloomberg
Bonus Chart: The disconnect between a swap-spread-implied model of EUR-USD exchange rates and reality suggests an 'agreement' post QE3 that 1.30 is the holy grail level...
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