The Eurozone met and little was apparently accomplished!
A casual market watcher on Friday (i.e. stock markets) in the U.S. and around the world, would have, in the absence of any below-the-surface analysis, most likely said that based on the performance of the equity markets the EU summit had been an unqualified success.
They may have believed that the financial crisis in the Eurozone had been adequately addressed and the EU member countries other than Great Britain, as well as the Eurozone itself, were put on a course for long-term financial stability.
The sovereign debt market tells a different story!
If indeed there had been any great success and the new treaty and other ancillary agreements had the potential to stop sovereign debt defaults, banking system failure and deep economic recession, then bond yields would have responded accordingly and fallen sharply as prices for the debt were bid up.
This is because the "smart money," or those who require a return commensurate with the risk they perceive they are taking, is typically playing in the bond market with the apparent exception of Jon Corzine.
But judging by the performance of Italy and Spain 10-year sovereign bond yields on Friday, the markets perception was that risk had not declined and in fact may have risen slightly as yields actually rose from Thursday levels.
What were some of the failings of the EU summit?
In an extremely comprehensive article at Seeking Alpha this morning the EU summit results, the markets reaction and the future outlook are analyzed. This is an excerpt along with a link to the article provided below.
Read the entire article at Seeking Alpha here.
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