Bond markets made a quick head fake in a weaker direction following the better-than-expected Consumer Sentiment release at 9:55am, but must have quickly remembered that it's Europe, and not the domestic consumer, that's at the heart of the ongoing epic flight-to-safety. Indeed, today is one of those days where bond markets and the European currency are very well linked-up, the latter taking it's first major cue of the morning on news out of Spain that its wealthiest province officially asked for help from the Spanish government to service its debt. Since then, the Euro fell to test a technical boundary at 1.25, which set up the lows that began the ensuing range trade with the highs ostensibly inspired by levels immediately preceding the Spain news. It's all right here in this chart... (hide)

* Consumer Sentiment at 79.3 vs 77.8 consensus/previous
* Current Conditions 87.2 vs 87.1
* Expectations 74.3 vs 71.5
* Main Index highest since 10/2007
* current conditions highest since Jan 2008
* expectations highest since July 2007

(Reuters) - U.S. consumer sentiment rose to its highest level in more than four years in May as Americans stayed optimistic about the job market, while higher income households expected to see bigger wage increases, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment rose to 79.3 from 76.4 in April, topping forecasts for 77.8 and an initial May reading of the same. It was the highest level since October 2007.

"Unfortunately, consumer confidence is still extremely vulnerable to a reversal, as occurred in the past two years," survey director Richard Curtin said in a statement. "While their most optimistic expectation for job growth could go unfulfilled without much harm, if the recent slowdown in job growth persists in the months ahead, it could form the basis for a third retreat in confidence." (hide)