Europe slides right into the tub... The more information that comes in, the forecast of a global collapse by June or July, 2013...may be wildly optimistic, what? Prepare now.
Yesterday that European credit markets were sending very different signals to the equity markets and sure enough today saw a bloodbath across European equity, credit, and sovereign bond markets.Portugal and Spain 10Y spreads are now +46bps wider on the week(and Italy +30bps) with Spain back over 6% yield (460bps spread) and at more than three-week wides.
While plenty will say 'but look where we came from' when today's dumpfest is put in context, but the critical aspect is the velocity and severity of today's 3-4% drop in Italy and Spain's equity markets and European banks now down over 9% from their post-FOMC peak (retraced more than 60% of the post-ECB rally). Europe's VIX jumped to over 22% as credit spreads (most notably subordinated financials - thanks to the 'AAA'nxiety over the banking union) were smashed wider.
It seems Ben's all-in move was the catalyst to bring a realization that things may indeed be worse than we thought - as sovereigns have blown wider since.