Friday, December 2, 2011

European Bond Yields 12-2-11

After the coordinated central banker move this week, yields have settled much lower, providing breathing room until the all-important E.U. Summit next Friday, 12/9/11.  The tempo is picking up with Europe now realizing the seriousness of the situation.  The focus is on a new European treaty and the framework will be needed within days. Merkel (Germany) continues to downplay expectations daily saying 'a Eurobond is pointless' and this morning saying 'it will take years to resolve the situation'.

10-Year Yields:
Italy 6.50%
Spain 5.58%
France 3.16%
U.K. 2.27%
Germany 2.18%
U.S. 2.11%
Japan 1.08%

Large drops are seen in Italy and Spain. Italy now has a six handle and Spain a five handle.  Interestingly, France is flat-lining so they need to be watched closely moving forward. The end game is here. Markets are probably willing to wait a few days for the Summit next week but expectations will be very high.  Europe needs to deliver solutions, not rhetoric, and time is short.

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