The broad Bloomberg 500 European index is up for the 4th week in a row (+6.9% over that time) showing a strikingly similar move to the pre-May collapse run. European stocks remain well off their YTD highs (unlike the US exuberance though) and there is an increasing dispersion across various countries (and asset classes). It appears that the rising tide of global liquidity is not floating all boats the same anymore. Italian and Portuguese stocks had their best week in almost 3 months at +4.3% (and Greece best in 2 months) but Italy's bonds only managed a meager 5bps compression in spreads. Spanish stocks gained only 1% on the week, much more in line with its 6bps spread compression. Portuguese bond spreads collapsed 64bps on the week - the best week in over 4 months as it's all fixed again eh? Europe's VIX is back below 17.5% and has seen its biggest 2-week drop in almost five months.
Another strong week for Europe...
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but bonds were completely ignorant (absent Portugal's illiquidty) of the equity exuberance..
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Charts: Bloomberg