Are US and Europe's economies at the point of divergence?

Strengthening fundamentals in the US and continued uncertainty over peripheral European economies have given rise to the notion that the US and Europe are undergoing a decoupling process. Credit looks at what this may mean for the US government bond and corporate credit markets.

Few investors were full of the joys of spring in May this year. As Europe’s sovereign debt crises took centre stage, peripheral European sovereign bond spreads began to widen and many investors fled to the safety of Bunds and US Treasuries.

But no crisis is an island and soon investors were asking questions about Europe in general, as it became clear that banks in Germany, France and Switzerland all had major holdings in the Eurozone’s problem countries. As the need for wealthier Eurozone