Spain v Germany widens again. - May put a dent in Stock's rally.

The spread between 10 year Spanish and German yields have widened significantly today, reversing much of the recent narrowing over the past week. This may cause headwinds for the recent stock markets gains as there has been a rough correlation between this spread and moves in the US stock markets over recent weeks.

The charts below show this rough correlation. -- Note; last weeks widening in this spread also saw a widening in Italian and French spreads versus Germany, thus far Italy and French spreads have not re-widened, perhaps mitigating the effect somewhat, however if this widening gathers steam over the next few days it could a) spill over into other European markets. b) start to affect risk appetite and hence stocks.
- Also worth pointing out that Moody's has downgraded Greece again in past hour or so. http://www.zerohedge.com/article/moodys-downgrade-greece-ba1-a3-stable-outlookand rbeen stable.