This Just In . . .

Just noticed this from Zero Hedge:

In the past 30 minutes, Europe has turned downright ugly, with short-term Bunds soaring to a record 140.64, and weakness creeping across the peripherals, as the realization that not only was the Spanish bond auction unsustainable, but also a French downgrade rumor once again making its way (the source of this is a Citi note by Michael Saunders who said that it is likely that Moody's will follow S&P, and put the French Aaa rating on review for possible downgrade by the autumn, after the country's supplementary budget is formalized). The result is a sudden and swift slide in the EURUSD to 1.3070 or the LOD. Here are some of the other recent surprising developments in the aftermath of what the propaganda machine wants to spin as a "successful" Spanish bond auction.

Some of the other developments in the past 30 or so minutes, via BBG:

• German Bund June Contract Rises 0.2 Percent to Record 140.64
• French-German 10-Yr Yield Spread Widens to Most Since Jan. 10
• Italian 10-Yr Bonds Extend Decline; Yield Up 11bps at 5.59%
• Spanish Stocks Slump to Day’s Low; Oil, Gold, Bond Yields Drop
• Spanish 10-Yr Bonds Extend Drop; Yields 8bps Higher at 5.90%
• Spanish 2-Yr Notes Extend Decline; Yields Rise 4bps to 3.46%
• Spanish Stocks Slump to Day’s Low; Oil, Gold, Bond Yields Drop

I haven't commented on the Euro zone for quite a while because it seems to be crumbling according to plan.  This article, however, definitely peaked my interest that we may be setting up for the next level of intensity.  The day of the flash crash back in May 2010, banks in Euro had essentially stopped lending to each other.  That caused the markets to come to a full stop.  It remains to be seen if these new developments will have any impact or whether they're just theater.

For my part, unless the S&P comes under 1375.86, I see another leg up in this complex correction.  That is what the futures accomplished last night and then sold off hard.  So let's see what the cash index does today.