Spreads are blowing out today in Spain, Italy, and so forth.
But there’s another sovereign debt story in Europe, and that is the collapse of yields in core and semi-core countries.
Morgan Stanley’s Anton Heese has a great report on the European “steamroller”… i.e. the flattening of curves and spreads throughout the Eurozone.
This chart is incredibly vivid. 2-year yields in Germany, France, Austria, The Netherlands, Finland, and Belgium are all zooming to 0%.
Belgium’s move, from borrowing at nearly 5% last year, to borrowing at around 0% right now is incredibly impressive.