European Bond Yield Summary 7/6/12; Germany 2-Year Zero Percent; Spain Nears 7%

10-Year Yields:
Greece 25.73%
Portugal 10.21%
Spain 6.98%
Italy 6.05%

Belgium 2.83%
France 2.41%
Austria 2.13%
Netherlands 1.78%
U.K. 1.65%
Finland 1.60%
U.S. 1.57%
Germany 1.37%

Australia 3.09%
Japan 0.80%

Germany's 2-year is now zero percent (below zero) indicating that investors are willing to give up a smidge of their money in return for parking funds in a perceived safer haven for two years. The Germany 10-year is back under 1.4% indicating the continued flight of money to Germany. As investors look for other places to park money, the Belgium, France, Austria and Netherlands yields are all moving lower as well.  Belgium has dropped 40 basis points over the last week. Others have dropped about 20 bips over the last week.  Note that Finland's yield is now below the U.K., investors preferring Finland over the U.K. although both are perceived as stronger places to hide money. Finland may move below the U.S. in coming days.

The news is not so good for the troubled nations.  Spain is about to move over 7% again where the bell rings to signal Euro turmoil. Bank run concerns continue and will increase once Spain blows out again. Italy is back up and over 6%; watch the 6.5% level to signal trouble.
 
Looking at the spreads, the France-Germany spread, the main indicator of Euro woes, is 104, below the 125 level that Keysotne uses to gauge increased turmoil. However, the Spain-Germany spread is 561 well above Keystone's danger level of 520. Ring the bell, 'Houston, we have a problem'. The Italy-Germany spread is 468, only two tiny ticks away from Keystone's 470 level he uses to signal big Euro trouble ahead. The U.S.-Germany spread is 20 approaching the 25 level that signals stress.

Watch the Spain 7% level and Italy 6.5% level moving forward. Watch to see if the Italy-Germany spread moves over 470 since that will signal increased Europe turmoil before the Italy 10-year yield moves above 6.5%. Spain continues to be the major worry as well as a loss of total confidence by investors in Europe which would increase and perpetuate bank runs, bringing on the end game.

Note Added 7/6/12 at 6:40 AM EST:  Spain 10-year yield is now 6.99%.

Note Added 7/6/12 at 6:48 AM EST: There she is, Spain hits 7%. First time since the bank aid and Euro Summit. Europe jumps from the frying pan back into the fire.