European Bond Yields 3/1/12

The E.U. Summit begins. The LRO2 announcement is now in the rear view mirror.  Italy and Spain 10-year yields are greatly improved but Portugal's is worsening. The Greece 10-year continues to blow out, now approaching a ridiculous high of 36%.

10-Year Yields:
Greece 35.84%
Portugal 13.73%
Hungary 8.57%
Italy 5.07%
Spain 4.90%
Belgium 3.57%
France 2.82%
Netherlands 2.32%
U.K. 2.18%
U.S. 2.00%
Germany 1.84%

The lower four countries continue to serve as a safer haven in this volatile world.  Portugal has blown out 100 basis points over the last two days, from the high 12's to now the high 13's, which indicates trouble afloat.  Portugal's 5's, 10's and 30's are all moving higher in yield, lower in price.  The 2-year yield has dropped over the last couple days to 12.71%. Hungary pulled lower in yield but will likely pop back up in the coming days. Portugal and Hungary are major worries currently.

On the other hand, Italy and Spain, the large contagion worries, since these two characters are actually too big to fail, and too big to bailout, are doing much better these days.  Spain is under 5% and Italy is headed there as well. Mario Monti is receiving a vote of confidence by markets since it appears that Italy austerity programs are being placed in motion, and, more importantly, the citizens realize their fate and are tolerating the changes, albeit for small protests from the cab drivers as they fear future competition hurting their business. Spain has now covered about 40% of their financing needs for 2012 so this is encouraging as well.  Keeping Italy and Spain in check is the whole ball of wax for Europe and likely the globe, so temporary congratulations to the Eurozone for balancing on the tight rope. France is maintaining under 3% as well which is also encouraging. Watch Portugal, this is the next and current battle ground. LTRO's only help temporarily, the final Eurozone story has yet to be written.