In one simple chart, here is the main reason why we aren’t seeing any serious recovery in the Euro Area, and why there’s such a big difference between German economy and the rest of the continent
As we keep on repeating, Euro Area lives in a bond bubble.
In 2011 bond yields and corporate rates started moving upwards in the whole Euro Area, then, one day, Mario Draghi made his famous statement of the “Whatever it takes”; from that moment bond yields started falling down.
Yes, this is what happened in bond spreads, but what about real corporate rates ?
There was no correction for “the common people” (i.e. everyone but countries).
This is, actually, Draghi’s biggest challenge at the moment: it’s time to take that curve down.