A couple of things. We observe that a stealth rally is taking place in the bond department. From high grade bonds over high yield paper to preferred stuff: a rotation movement is propelling the price of these assets higher. The whole sector is revalued. The ETF’s of these three categories have a nice run.
This is a sign that liquidity is coming back: investors try to pick up these assets because risk wise they offer a very generous premium.
This means also good news for some European banks whose portfolios are frozen for the last six months and this positive action helps to improve the mark to market of these assets. This will at least stop the bleeding of the balance sheet. It is too early to say a bottom is in, but we see some nice price movements for the moment in the European bank names, battered the most.
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