The last few days have been the worst for peripheral European bonds in well over a year. Spain, Italy, Greece, and Portugal have all seen yields jump and credit spreads soar in the last week as ‘faith’ in Draghi appears to be faltering. The reason this is concerning is, as we explained here, in the new normal, negative feedback loops have gone and instead we have hyperbolic loops which, when broken, end much more badly than a self-correcting un-rigged market would.
By way of example, here is Italian bond risk…
and that new Greek bond issue is underwater…
and the entire European periphery in the last week…
this can only last so long…
via Zero Hedge http://ift.tt/1mSzrZe Tyler Durden