European Bond Yields 11-24-11 Thanksgiving Day

As the U.S. prepares for the Thanksgiving Day feast, here is a look at European 10-year yields;

Italy 6.90%
Spain 6.60%
France 3.67%
Germany 2.23%
U.K. 2.20%
U.S. 1.89%

Keep watching the 7% levels for Italy and Spain. Italy has been dancing above and below, a sustained lingering above 7% spells trouble. Should Spain cross above the 7% level, that is a big deal. France 10-year yield has steadily crept upwards over the last week moving up 20 basis points over the last couple days.  Germany's 10-year is also seeing a quick move upwards, popping about 30 basis points this week, well over 2% currently.

The U.S. Treasury, however, drops a few basis points lower this week as the equities markets continue to sell off; some of that money moving into notes and bonds driving price upwards, yield lower, the opposite of its European counterparts. Thus, there is a healthy demand for the U.S. paper as the global turmoil plays out; the U.S. auctions went very well this week.

The shakiness from Germany stems from a poor auction this week. Also the ongoing news flow concerning the implementation of Eurobonds in the future.  Germany slaps the Eurobond concept causing uneasiness for global markets.  From Europe's point of view, they simply want Germany to come in and save the day, committing to bank-rolling the other countries' profligate spending. From Germany's point of view, they want to see the other countries institute plans getting their fiscal houses in order first. This is reasonable and fair but other countries are not making progress on their fiscal plans--they need to get to work.  Those are the two sides of the story.

Meanwhile, the yields above continue to rise and time is running out. Each day the tension grows. It is also hoped that China will be a white knight but their economy is going into the tank now as well. Further complicating the situation is a potential downgrade of France's debt.  In a nutshell, for the 10-year's, watch 7% levels for Italy and Spain and watch rate of change for France and Germany.

Note Added 11/24/11 at 4:44 AM EST: Latest prints for 10-year's; Italy 6.92%; Spain 6.58%; France 3.63%.

Note Added 11/24/11 at 5:57 AM EST: Latest prints for 10-year's; Italy 6.99%; Spain 6.59%; Germany 2.19%.