MOAR Cause For Concern: Sovereign Bonds Yields For PIGS Diverge From Non-Bankrupt Countries in Europe

That’s a truly fucked up headline. I hope you’d come to expect these sort of things from me, by this time, at this point in the game. We’ve all been playing in a hall of mirrors, imbued with smoke, since 2007. The narrative changes, in the tiniest of ways, but the overall theme remains constant. Central banks, in concert with large banking institutions, work towards the never-ending task of inflating asset prices. One of the truest enemies of this storyline is the fragility of the European Union.

On paper, all nations are the same, just like a grande olde communist block. But, in truth, Germany and France are the only countries able to withstand hard times. Even during the panic wrought days of 2011, when the currency was in crisis, French sovereign yields spiked hard, as the wolves circled the wagons in search for weak prey.

I’ll cut to the chase. The acronym PIGS stands for the weakest of the lot (Portugal, Italy, Greece, Spain). When their sovereign yields diverge from Germany, it usually means there’s some stress in the banking system. It is the proverbial canary in the coal mine.

Portuguese yields are now +319 bps above Germany, the highest in quite some time.

Additionally, all of the PIGS yields are rising, while non-EU member Switzerland plunge.

The ultimate fear index is flashing red. Hide the kids. No one is safe.

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