European Bond Yield Summary 4/2/12

10-Year Yields:
Greece 20.96%
Portugal 11.62%
Hungary 9.06%
Spain 5.29%
Italy 5.06%
Belgium 3.38%
France 2.89%
Netherlands 2.35%
U.K. 2.26%
U.S. 2.22%
Germany 1.83%

Greece, Portugal and Hungary yields are up since Friday; Greece is headed over 21%, Portugal is headed towards 12% and Hungary now over 9%. The perceived safer haven countries U.S., U.K. and Germany also display yields higher than Friday.  The Eurozone PMI's are weaker indicating a contracting manufacturing sector in Europe. Even sturdy Germany says the manufacturing orders are falling. And this is the result after the LTRO1 and LTRO2 quantitative easing. The Euro area unemployment rate is 10.8%, highest in 14 years.  Germany is enjoying the lowest unemployment rate in 20 years but the other countries such as Spain and Italy are in trouble. A Germany bond offering is on tap shortly.

Japan Tankan Survey shows unenthusiastic manufacturing sentiment moving forward. The big story is the China PMI. This official number is a touch over 53 indicating a continuing expansion in the manufacturing sector, up five months in a row and now over 50 (the line between contraction and expansion) for four months.  China, however, has learned off the U.S. how to manipulate, fudge and massage data, so the numbers are suspect.  The HSBC PMI that follows after the official number, that is considered more reliable, shows contraction with a 48 handle and it has been trending down. The official China number gauges about 800 firms and is not seasonally adjusted. The HSBC is about 350 firms but incorporates smaller firms in its analysis. The Lunar New Year and March seasonality where higher PMI's should be expected is also in the mix.  The market reaction is difficult to forecast since the two China PMI's are diverging now, and also as manufacturing weakens, the liklihood for quantitative easing (triple R cuts) becomes more likely and that will pump copper, commodities and equities.  The cross currents continue since China says it wants to stay a prudent course, meaning that it is in no rush to announce another triple R cut. China markets are on holiday until Thursday. Europe is China's largest customer.