While the disquieting calm (before the storm) of the last hour in European markets suggests traders sitting on their hands into a bazooka-ridden weekend, we thought a look at what happens when the ECB stops playing may help. Based on the velocity of price-jump, the last two weeks have seen at least 16 interventions by the ECB into the BTP market and still the price is down significantly. Most importantly, on the two occasions when the ECB has deemed to let free markets reign, we have seen BTP prices free-fall. Have a great weekend, Europe.
Most notably, the last two days have seen a clear focus of attention on France and Italy and Spain has been somewhat left in the dust. Spanish bonds are now 80bps wider on the week and its worth noting that EFSF spreads broke 200bps earlier this morning!!