European Bond Yield Summary 5/22/12

10-Year Yields:
Greece 29.17%
Portugal 12.40%
Hungary 8.47%
Spain 6.12%
Italy 5.63%
Belgium 3.25%
France 2.81%
Austria 2.50%

Netherlands 1.94%
U.K. 1.87%
Finland 1.80%
US. 1.77%
Germany 1.47%

Portugal Yields:
2-Year; 9.83%
5-Year; 14.72%
10-Year; 12.40%
30-Year; 10.16%

Spanish debt auction went off minutes ago with no surprises. Greece continues along near the 30% level with fears of runs on the banks a major concern now. European leaders meet in Brussels tomorrow to look for solutions; a showdown looms for Merkel (Germany) versus Hollande (France). Yields in general are somewhat sideways from last week. Spain remains above 6% and Italy remains below. France is around 3%. Hungary is about 8.5%.  The notable exception is Portugal.  This debt crisis game is like the whack-a-mole game where once you knock down one problem another problem pops up. While everyone watches Greece and Spain, Portugal is showing signs of major stress again.

The Portugal 10-year yield has jumped from about 12% late last week to 12.40% today. 12.50% is a line in the sand Keystone has been watching for Portugal.  The yields for Portugal show the 5's thru the 30's to remain inverted indicating economic recession. The 2-year yield has jumped over 110 basis points in the last few days while the other durations have moved up much less.

The safer haven countries are all under 2%. Germany continues to print near record lows. The U.S. dropped under 1.80% last week. Thus, Greece, Portugal, Spain and Hungary remain major trouble spots.Watch to see if Portugal jumps above 12.50% which will ring a bell for major stress occurring. Also watch to see if Italy climbs above 6% which will ratchet up the drama as well. U.S. futures were positive but continue to now leak lower into the red.

Note Added 5/22/12 at 5:32 AM:  Fitch downgrades Japan and issues a negative outlook, an important development.