European Bond Yields 3/26/12

Italy's leader Monti warns that Spain could reeignite the European debt crisis.  Nothing like throwing stones at the glass house next door. Finland warns of Spain's problems as well.  Euro leaders meet in Copenhagen this week.  There is mention of an 'exit strategy' this morning which is laughable.  Europe is folowing the same game plan as the States. Pump money into the system, hope the money gains velocity thru lending, kick the can down the road, and at the same time try to instill confidence in people so they can slowly reenter and support markets. Time is the main key, the farther you can move down the road the closer you get to solving the debt problems. Thus, any mention of exit strategy is ridiculous from a practical standpoint at this time, but it is likely a simple magician's trick to try and instill confidence in the Eurozone.

10-Year Bond Yields:
Greece 20.36%
Portugal 12.58%
Hungary 8.93%
Spain 5.31%
Italy 5.00%
Belgium 3.32%
France 2.92%
Netherlands 2.45%
U.K. 2.26%
U.S. 2.25%
Germany 1.87%

Greece yield is up and over 20% gaining almost 250 basis points since Thursday. Portugal is moving sideways and their yield curve remains inverted from the 5's thru the 30's indicating recession ahead.  Hungary steadily climbs higher day after day.  Yields are blowing out higher; perhaps a bell will ring when it hits 9%?  Spain's plans for austerity are hitting a snag today in addition to the slaps in the face from Italy and Finland.  Spain 10-year yield is moving sideways, actually lower than Friday, now at 5.31%.  Italy sits directly on top of the 5% level. France is below 3% the first time in a week.

Money continues to seek a safe haven in Germany with its yield another tick lower to 1.87% as its price rises. Note that the U.K. and U.S. are at the same yield level at 2.25%-ish.  Germany and France auctions are going off this morning.  Portugal will need a second bailout, Greece a third, and Ireland will likely need additional help as well.  Spain has raised about 40% of its borrowing this year, which is a positive, but, on the glass half-empty side, they worry about markets closing their open arms for the remaining 60% this year. An optimistic note for Portugal is that their unions are working closely with the government to find solutions, which does not appear the case in Spain.