European Bond Yields 1/12/12

European bond yields were lower ahead of the Italy and Spain auctions and the results are in over the last hour.  The auctions went off with little drama. The euro moves higher on the news. So the drama surrounding the Italy and Spain bond auctions this week was overrated.

10-Year Yields:
Italy 6.64%
Spain 5.21%
Belgium 4.08%
France 3.06%
U.K. 2.02%
U.S. 1.92%
Germany 1.85%

U.S. futures popped on the positive auctions, the S&P futures jumping five points. Italy is back under the 7% level.  France now well under 3.3%.  The U.S. 10-year note auction goes off today at 1 PM EST. For now, it appears that tensions are easing and the worries over this weeks' auctions were a pig in a poke. The Italy-Spain spread (664-521=143) is now 143 bips and got as low as 138 a short time ago reinforcing this mornings positivity. This narrowing of the spread is mostly due to the fall in Italy's yield. Although the auctions went well, it is shorter term paper. The global situation remains shaky so continued caution is warranted. The ECB rate decision and press conference is next on today's list.