Even as the EUR soars (breaking above 1.3450), European bond and stock markets (most notably the peripherals that have soared recently on nothing but air and rotating momo liquidity), are collapsing. Spain and Italy are down 4.2% on the week, Greek stocks have dumped 6.8% and even the core are down almost 3%. Peripheral bonds (which actually outperformed in the rally) are sliding fast with Spanish and Italian bond spreads snapping 15bps wider. Europe's VIX has surged to its highest in a month (near 20%) and credit spreads for financials and corporates continued to blow wider, with stocks catching down. This is the biggest 2-day drop in 2 months for most assets.
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