European Bond Yield Summary 4/16/12

The Greek tragedy has spread contagion creating ongoing Euro drama.  The week begins with Spain, Portugal, Hungary and Italy the focus. The yields are blowing out to the upside signaling trouble on the horizon.

10-Year Yields:
Greece 21.13%
Portugal 12.62%
Hungary 8.97%
Spain 6.14%
Italy 5.63%
Belgium 3.45%
France 3.01%

Netherlands 2.26%
Finland 2.14%
U.S. 2.03%
U.K. 1.98%
Gemany 1.72%

All the yields above have moved higher since Friday except the U.K. which is down 8 bips and Germany which is now back down in the low 1.7's.  This clearly shows the money moving out of Spain, Italy and the other countries listed at the top of the list to the countries at the bottom of the list.  Spain has blown out well above 6%, jumping about 25 basis points since Friday, and Italy is about 20 bips higher than Friday at 5.63%.  Spain default insurance for the 5's are now hitting record levels. This blowout in yields is pressuring the euro which moved under 1.30 this morning, the lowest print in two months, and now travels sideways across this critical S/R level. The Spain-Germany and Italy-Germany spreads are obviously increasing as the Spain and Italy yields climb while money seeks perceived safety causing Germany yields to drift lower. These spread levels match the spreads from the November-December period which is a bad omen moving forward.

France is over 3% as the politics ahead of elections is creating worry. The French banks are selling off today. GS sells shares in ICBC Bank overnight which dipped the futures hours ago. Japan and China markets traded lower on the news. Note how the troubled nations are all at 3% or higher while the perceived safer havens group are all about 2.25% or lower.

Portugal Yields:
2-Year 10.37%
5-Year 14.09%
10-Year 12.62%
30-Year 10.46%

Note the yield curve inversion from 5's thru 30's indicating recession ahead and now the 2-year is moving up to potentially create inversion in relation to the 30 in the days ahead.

Spain Yields:
2-Year 3.73%
5-Year 5.09%
10-Year 6.14%
30-Year 6.53%

Italy Yields:
2-Year 3.40%
5-Year 4.88%
10-Year 5.63%
30-Year 6.19%

The numbers above serve as a base reference point to gauge the European and global contagion moving forward. The big event is Thursday morning with the bond auctions; markets may drift along until then when the auctions will provide a direct gauge on Euro woes. The results of these auctions will occur in the 4 AM EST to 7 AM EST time frame early Thursday morning. U.S. futures are recovering now up five handles in the S&P's.