Yesterday, the European bond market got a reprieve.
It lasted one day.
Today, Italy's 10-year yield jumped back UP. French yields UP. The respective spreads against the benchmark German bond yield widened. And the euro fell back toward Monday's 17-month low.
And European bank stocks took a hit. Société Générale fell 5%, Deutsche Bank about 5%, UniCredit and Intesa 4%. As we discussed last week, European banks are among the biggest owners of their own governments' bonds. When those bonds fall, the banks fall with them.
This is the effect of the energy shock we've discussed along the path of the past seven months. It exposes the anti-growth climate and social agenda that the Brussels bureaucrats have imposed on the European people.
The bond market is beginning to apply pressure on the European economy, which will apply pressure on European politicians.
This is the "political alignment" by consequence, we've talked about.
Let the political class face the consequences of the costs their voters are no longer willing to pay. The goal: bring Europe back into alignment with the United States, away from Chinese influence, and away from its "third pole" posturing.
On a related note, today in Athens, the U.S. Secretary of State stood in front of the Acropolis and delivered a message to Europe.
And the choice of Athens was the message.
Rubio went to the birthplace of democracy and Western philosophy to remind Europe where it came from, and how far it has strayed.
He said the West "came to feel ashamed of the very things that made us exceptional." That "nationalism became a dirty word." That "we opened our borders and outsourced our industry, and allowed our militaries to wither and to decay."
He said the West "seemed to outsource more of our sovereignty, transferring our decisions to global bureaucracies far beyond the reach of our control."
Then he drew the line. "Under President Trump, the United States has made its choice." Europe, he said, can still "awaken from its long slumber and rekindle the fire that was lit here millennia ago."
America has chosen. Europe hasn't, yet.
And now, the bond market is adding pressure to that decision.
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