Remember the big PIIGS?

Spanish IBEX is the top performer in Europe YTD. The index has gained 11% from late December. We have no great take on Spain, but the IBEX is starting to look a bit stretched here.

Note the big trend channel that has been in place for the past year as well the fact we are trading right at those levels from where we reversed from earlier in November and December.

Italian MIB is the second-best performer in Europe YTD. The index is just approaching big resistance levels from last year as well as the big negative trend line. Maybe all is fine in Italy, but chasing longs here looks a bit late.

It is maybe not overly surprising to see the Spanish and Italian equity indices as top performers. Much of the yield themes that investors feared last year have totally reversed. Spanish 10-year yields have been crashing lately.

Remember when CNBC only spoke about the BTPs? These days nobody speaks about it, despite the fact Italian 10-year yield trades at lowest levels since last summer. Markets are run by narratives rather than “fundamentals”, but that should not be a surprise for investors.

Source: charts by Bloomberg