Browse Symbol Stacks: EEM: 20120724_EURUSD_vs_CDS.png (719×384)

20120724_EURUSD_vs_CDS.png (719×384)

The spread between Germany and USA 'risk' has risen notably since the EU Summit. This implicitly means the market is pricing in some level of acquiescence by Germany. At the same time, EURUSD has slipped dramatically lower as it appears that market believes that the EU is heading to some cataclysm reality (that implicitly does not include an unlimited German backstop).

Comments

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For CDS discussion related to trusted governments, see GillianTett, FT, 23July12 7/24/12