Good reporting season v economic turmoil

ON EUROPE

Just as European investors thought it was safe to re-enter the water, the sovereign crisis once again flashes a fin to remind us that the dangers are not yet past.

By mid-March, Italian bond yields had fallen from 7.3% in November to 4.8%, showing returning confidence in peripheral markets, attendant on the two successful LTROs in December and February. Spanish bonds also joined in the party, falling from 6.7% to a more sustainable 4.85%. Markets began to dare to hope that the worst of the sovereign crisis was behind us – indeed, various Eurocrats lined up to say as much. The VIX index of volatility fell to levels not seen since before the financial crisis. Then, as is the pattern of the sovereign crisis, trouble flared up again unexpectedly, pe...