All You Need Know In The European Bond Market Is That We Are Between 'Anger' And 'Bargaining'

An optimist might bet on decoupling in Europe’s credit market, as strong corporates outperform battered sovereigns.

Citi’s Hans Lorenzen isn’t an optimist. His new report (via Zero Hedge) warns that sovereign malaise will hurt the economy and caused increased corporate defaults.

Until the sovereign debt crisis clears up, Lorenzen recommends trading based on the five stages of trauma — which we’ve already cycled through once. Right now we’re in the anger stage, when correlations are high; the next stage will be bargaining when correlations begin to fall; then, potentially, comes depressed followed by denial followed by anger again.

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