European bond markets, simply put, did not blink at anything this week (and Portugal spreads actually rallied) as the insanity of that segment of the market remains. Europe’s high-yield credit market moves to near record low spreads (on rumors of an aggressive hedge fund squeeze). But all of this beggars belief as we see European stocks giving up their post-Putin gains and collapsing today on the good-news-is-bad-news from the US but much more critically the Gazprom threats (which smashed Germany’s DAX red for 2014 and down around 2% today).
European stocks have given back most of the post-Putin gains (with Germany hardest hit as it is most affected by any retaliation from sanctions)
European sovereign bonds remain totally unphased
as it’s clear the “management” in Europe cares more about the credit markets than the stock market (as opposed to the US…)