European Bond Yields 4/27/12

10-Year Yields:
Greece 21.03%
Portugal 10.87%
Hungary 7.97%
Spain 5.94%
Italy 5.74%
Belgium 3.37%
France 2.99%

Netherlands 2.25%
Finland 2.10%
U.K. 2.08%
U.S. 1.92%
Germany 1.67%

Yields are relatively well-behaved after the S&P downgrade of Spain last evening with negative outlook. Portugal is down 180 basis points over the last week, a large move lower, placing Portugal on the back burner for now.  Spain printed 6% a short while ago but remains under for now, ditto Italy. Netherlands has dropped 15 basis points since Monday now down to 2.25% moving into the safer-haven grouping.  Germany yields remain low as money seeks safety there. The downgrade of Spain was expected and the reaction is muted in the markets. The troubles in Europe will continue to keep yields on U.S. Treasuries low as money seeks perceived safety.

U.S. futures, that were weaker on the Spain downgrade news last evening, have now recovered to the flat line ahead of the GDP number that is released at 8:30 AM EST, less than three hours away. For GDP, average consensus is expecting about 2.6% but traders are really focusing on a number 3% or better considering all the stimulus that has been thrown at the markets. Thus, an equities rally should occur if GDP is above 3%, probably sideways action if the number is between 2.6% and 3.0%, and an equities market sell off is likely if the GDP comes in sub 2.6%. The dollar is weak this morning which will help boost commodities, copper and equities. The GDP number will impact the dollar.