European Bond Yield Summary 5/14/12

10-Year Yields:
Greece 25.42%
Portugal 11.05%
Hungary 8.20%
Spain 6.22%
Italy 5.64%
Belgium 5.64%
France 2.84%

Netherlands 2.01%
U.K. 1.91%
Finland 1.83%
U.S. 1.80%
Germany 1.48%

China's triple R cut on the weekend that should stimulate commodites and equities markets is falling on its face.  Greece is dominating the news as talk of a Greek exit is now under serious consideration. German Finance Minister Schaeuble says that Europe "can't force Greece to stay in the euro."  The bad news continues.  Spain banks are borrowing record-breaking funds from the ECB to stay afloat.  Merkel (Germany) suffers a set back as support drops for her party; voters turning against her policies. This triple whammy is sending the euro under 1.29, as Greece and Spain yields blow out.

Adding more drama, MS lowers estimates on European banks which are hit hard in today's trade many banks down from 2 to 6%. European markets are down close to 3%. Bankia is down over 7%. China and Asia were weak overnight despite the triple R cut. Greece yield has now blown out above 25%, each day printing a new high as the country falls apart.  Portugal is now back over 11% but somewhat well-behaved staying under the ctitical 12.5% level.  Hungary remains a worry over 8%. Spain is the major cause of today's mini-panic. Spain is at 6.22% blowing out to the upside as investors run from this troubled country.  Italy is over 5.5% working towards 6%. France remains under 3%.

The safer haven countries see yields dropping like a stone.  The Netherlands is on the verge of dropping under 2%.  Germany is now printing under 1.48%. The U.S. is on the verge of losing the 1.80% level. As money runs from the troubled nations and seeks safety in the Netherlands, U.K., Finland, U.S. and especially Germany, prices on notes and bonds climb higher due to demand, and yields move opposite of prices, thus, the yields on the perceived safer havens tumble lower.

Auctions are on tap for Italy, Spain and Germany this morning. Protestors take to the streets in Europe which should exacerbate the worries.  The heat of the summer, and soccer championships next month, will only serve to fuel the anger of the unemployed and those that have lost hope in the euro system with rioting likely increasing. U.S. futures are looking for a drop at the open, five hours away, and in fact just dropped again from down about nine S&P's to now down about 13 points. Use the Germany-Spain 10-Year Yield Spread now at 474 basis points (622-148) as a guide moving forward.

Note Added 5/14/12 at 5:27 AM: The drama continues with 10-year yields now printing; Spain 6.28%, Italy 5.90%, U.S. 1.79%, Germany 1.46%.