European Bond Yields 2/7/12

The LTRO program continues to create calmness in Europe, traders are already looking for the program to be extended in the next two or three weeks.  The RBA (Australia) suprisingly kept rates on hold at 4.25%.  Thus, the recent lowerings were put on hold so the Aussie markets fell, banks are weaker.

There remains no deal with Greece, what else is new? Merkozy (Germany's Merkel and France's Sarkozy) conduct a joint interview on television last evening to warn Greece that it is running out of time. The markets continue to act indifferently to the lack of a deal between Greece and bondholders. China anticipates slower growth moving forward and the effects are already showing in neighboring Asian countries.

European 10-year bond yields are well behaved lately, the LTRO providing calm.  Portugal moving up 25 basis points in the last 24 hours to 13.64%. Hungary backed down 10 bips from yesterday, the ECB no doubt intervening with bond purchases.  Italy 10-year yield is flat at 5.66%.  Spain is back above 5%. Germany and the U.S. remain the safer havens with 10-year yields at 1.87% and 1.92%, respectively.