European Bond Yields 1/13/12

Italy bond auctions are ongoing now.  The demand on the current auction appears low, the bid-to-cover on the low side, the dollar dropped suddenly and the U.S. futures (S&P's) lost three handles in a heart beat.  Futures are now recovering to the flat line as the auctions continue.  This action is reminiscent of 2008 when traders would focus on the Libor rates 24/7.  Fast forward to 2012 and traders now focus on the European bond rates each day.  The dramatic impact the bond auctions have on U.S. futures easily proves this concept.

Italy 10-Year Yields:
Italy 6.55%
Spain 5.11%
Belgium 4.02%
France 3.00%
U.K. 2.00%
U.S. 1.90%
Germany 1.78%

Italy is under 7%. France is sitting at 3%. Germany 10-year is now under 1.80% yield. The U.S. is walking on eggshells waiting on the JPM earnings release at 7 AM EST, a little over an hour from now.  The results will dramatically effect the banking sector and the U.S. futures, as well as global markets.