Elsewhere, the news just gets better in Europe. Yesterday's Eurozone economic confidence indicator recorded its largest drop in the history of the survey (how often have we heard that phrase recently?), and UK flagship retailer John Lewis has seen sales fall 9.8% y/y.
More ominously, there is a serious gap opening up between core and peripheral government bond yields within the Eurozone...which is pricing in a serious chance of either default or a fracturing of the single currency zone. Ten year Italian government bonds now yield 1.25% more than their German counterparts. The 10 year CDS spread between the two is 75 bps.....so at least some of this spread widening appears to be pricing in the chance of the Eurozone not reaching its 20th birthday.
(c) Macro Man, Treat... or trick
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