Yield spreads between benchmark German bunds and Italian and Spanish debt continue to contract in the wake of the favorable German court ruling on the ESM. Risk has rallied for better than a month since Draghi tipped his bond buying plan as fear of a euro collapse have largely vanished.
Spanish spreads to bunds have narrowed almost 2.5% from earlier this summer while Italy is 190 bp tighter.
Tighter spreads equal fewer European jitters equals risk-on equals strong stocks, commodities, and euro.
