European Shares, Italian Bonds Have Worst Day In History. Literally. So There’s That.

If you thought Monday was a day that would live in infamy – one to “tell the grandchildren about”, as it were – it will now exist in Thursday’s shadow.

When they write the story of this week – when these last several days are inscribed in the annals of market history – Thursday will go down as one of the most notable sessions in nearly a century. That is not an exaggeration.

On the heels of Donald Trump’s announcement that the US would restrict travel to Europe, and in what amounted to an outright market revolt against perceived political paralysis in the face of a public health crisis, European shares plunged the most in history. The Stoxx 600’s losses on Thursday were the deepest since the benchmark was introduced.

European shares are down an astonishing 33% since the highs last month.

As I put it earlier, you are unlikely to witness anything like what you see in the following chart ever again, no matter how old you are. This kind of decline at the benchmark level (not just the scope, but the sheer rapidity of it) is truly remarkable.

The ECB added €120 billion to QE and expanded/enhanced its liquidity provision mechanisms, but left rates unchanged. Germany was said to weigh abandoning its commitment to a balanced budget, although sources said “no decisions have been made on specific measures or an amount”. (Imagine that.)

German and Italian equities were absolutely crushed on Thursday. The English language fails as a sufficient tool when it comes to describing the one-day losses shown in the charts. Maybe those fluent in German and Italian can conjure the right phrases.

Italian bond futures were halted after plunging 715 ticks. Yields rose the most on record for a single day.

In short, Christine Lagarde’s contention that the ECB’s job isn’t to “close spreads” didn’t go over particularly well, and by that I mean it triggered a total meltdown:

As you can imagine, Lagarde went into damage control mode after that.

“The package that we have and the tools that we can deploy will be completely available to Italy”, she reiterated, during a subsequent interview with CNBC. “We are very mindful of the fragmentation risk and we will deploy all the tools that we have in order to avoid that”.

Suffice to say the market was skeptical or perhaps just prone to overreacting, but the bottom line is that, on a day when nerves were the most frayed since the crisis, it’s not a great idea if you’re the ECB president to explicitly say it’s not your job to ensure the periphery retains market access in a crisis.

“This package is actually designed with a view to avoiding the risks including the risk of fragmentation”, she went on to insist. “So we’ll be there, no question about it”.

With all due respect, Christine, there are questions. Lots of them.