European Bond Yield Summary 9/26/12; Spain 10-Year Yield Hits 6%

10-Year Yields:
Greece 19.49%
Portugal 8.86%
Spain 6.02%
Italy 5.19%

Belgium 2.59%
France 2.24%
Austria 2.09%
Netherlands 1.79%
Finland 1.79%
U.K. 1.75%
U.S. 1.66%
Germany 1.51%

Spain 2-Year Yield 3.41%
Spain 5-Year Yield 4.75%
Spain 10-Year Yield 6.02%
Spain 30-Year Yield 6.63%
2-10 Spread = 261

Italy 2-Year Yield 2.42%
Italy 5-Year Yield 4.15%
Italy 10-Year Yield 5.19%
Italy 30-Year Yield 5.86%
2-10 Spread = 277

Keystone has not posted the European bond yields for about six weeks. Once Draghi announced that he would support the euro by all means necessary, on 7/26/12, yields moved lower and Europe calmed. Over the last day in Spain, however, police are firing rubber bullets into the rioting crowds.  Greece has a strike underway today.  Markets appear to have given up waiting for Spain to request a bailout; Rajoy is playing games and does not appear in a rush to request the bailout since the lower yields takes the pressure off. The lower yields came about because of Draghi's jawboning and action, however, and this action assumed that Spain would request the bailout.  Spain's 10-year moved back above 6% a short time ago. This signals trouble returning to Europe.

A Germany debt sale this morning did not go all that well which should lead to higher yields but Germany trickles a shade lower in yield. This tells you the move to safety is occurring again in light of the riots and drama developing on the European continent.  The spreads in general, Spain-Germany, Italy-Germany, the 2-10 spreads for Spain, the 2-10 for Italy, are all relatively well-behaved still yet.  The Spain 10-year yield up over 6% again now which requires a renewed focus on the European bond yields as time moves forward.

Over the last few days, the U.S. 10-year yield has dropped from 1.8% to 1.75% to 1.7% and now lower.  Lower yield = lower equity markets; higher yield means higher equity makets.