Between escalating Grexit concerns and Podemos ‘victory’ in Spain, European bond and stock markets shuddered somewhat today. EURUSD continues to close lower – back below 1.1000. All major bourses across Europe are in the red with Greece and Spain worst (ASE -3%) but the most notable shift is a collapse in Poruguese bonds. Illiquidity has always been an issue for PORTUG bonds but today’s near 4 point collapse in 10Y bond prices (and 48bps spike in spreads) is dramatic to say the least. Spain also saw bond risk jump 10bps. Bond yields and spreads are now higher than before Draghi announced Q€ in January and dramatically higher since bond-buying began. If EU leaders proclaim they can see no contagion from Greece, show them these charts. Finally, despite cash markets being closed, US equity futures also suffered (despite an exuberant BTFD rip higher in China overnight).
European stocks in the red…
Portuguese bonds are crashing… unwinding all the excited exuberance of Q€… Of course with The ECB hoovering up everything in sight, any selling pressure is exaggerated by the total lack of liquidity (see CYNK or Hanergy) but based on Bloomberg data it appears real and traded and is the benchmark 10Y bond for the nation!
EURUSD continues to close lower – back below 1.1000…
US markets were not unharmed as futures slid further from the late-Friday weakness…
China’s incessant BTFD’ers came out after a very weak opening but by the close the great rotation from CHINEXT momo high-flyers to Shanghai idiot-makers was well on its way to exponential…
Charts: Bloomberg
In other words, people are still stupid enough to believe the system ISN’T rigged against them.
Yup