Europe Gives Euro Doomsayers Pause With Dormant Davos Sanatorium

European leaders heading to the home of Thomas Mann’s Magic Mountain sanatorium are surprising credit-ratings companies, and the economists who agree with them, as the consensus predicts another year of trauma for the euro area.

Money market lending rates have eased, economic data from Germany to France are beating analysts’ estimates and Italian and Spanish bonds are rebounding after their yields reached euro-era records in November. The Bloomberg European Financial Conditions Index has risen to minus 3.5 percent, its highest since August and up from a low of minus 5.4 percent in September.