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Update II: Wow. The half-life of a European relief rally is now down to about 15 minutes.Following last nights Greek election — which saw the pro-bailout establishment party win — markets initially rallied on the preservation of the status quo.

And stocks in Europe opened higher.

But now that’s all gone, as the market carnage continues.

The Spanish market is down over 2%.

Italy is down over 1.6%.

Yields in Spain have shot up to record highs. Italian yields are higher as well.

US futures are now red.

The bottom line is that nothing is solved. Only an acute crisis has been delayed in Greece, and it’s not clear how long it’s been delayed for. Heck, Greece still hasn’t technically formed a government.

The market is waiting for something big, either in the form of real policy action from European politicians (bank guarantees, etc.) ore a massive move from the world’s central banks. A tenuous Greek government isn’t going to cut it.

Click here for full coverage of last night’s historic Greek election >

And see here for David Zervos’ explanation of why there’s bad news hidden in last night’s Greek election result >




Europe’s rally has already completely vanished.

After starting off higher — in part due to some relief from the Greek election — Italy’s FTSE MIB index is now down 0.1%.

Spanish borrowing costs are now a tick higher and Italian borrowing costs are basically flat.

US futures are still barely pointing to a gain.


ATHENS, GREECE — The initial market reaction to last night’s Greek election result — which saw the pro-bailout New Democracy party come in first — is positive, as people would have expected.

But markets aren’t exactly exuberantly jumping for joy or anything like that.

Spanish and Italian borrowing costs are down just marginally from elevated levels. The yield on the Spanish 10-year bond is still at an unsustainably high 6.824%. Italy is at 5.902%.

Meanwhile, Italy’s main stock index, the FTSE MIB is up about 1%.

For more on last night’s Greek election, see here >

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