European Bond Yield Summary 5/30/12

10-Year Yields:
Greece 29.82%
Portugal 11.96%
Hungary 8.47%
Spain 6.67%
Italy 5.98%
Belgium 3.13%
France 2.58%
Austria 2.30%

Netherlands 1.76%
U.K. 1.71%
U.S. 1.70%
Finland 1.62%
Germany 1.32%

Spain is crumbling. Bankia bank continues to fall.  Confidence is lost in the Spain banking system. In addition to worries of bank runs on Greece and Spain, now there are worries about Italy. Spain 10-year yield has now blown out above 6.5%. The 6.5% to 7.0% area is where big trouble occurred last Autumn. Italy is now at 6% heading up. The Euro mess is the major driver of global markets with the news flow immediately impacting markets.  Note how the perceived safe haven countries continue to see yields dropping as money seeks safety. Each day brings a new Germany record low in yields. The Germany 2-year yield prints 0.416% this morning, a record low.

Watch the spreads. Spain-Germany 10-year spread is 535 points! Italy-Germany spread is 466 points. Please provide Keystone a chair so he can sit down and catch his breath from this dire news.  U.S. futures are lower today poised to give back much of yesterday's gains. China said that traders are getting too bulled up about potential stimulus coming and there are no plans for any significant stimulus measures.  This is code for it is not time yet.  Behind the scenes, the Fed, ECB and China are likely working together to set up a coordinated intevention that will include QE3 and LTRO3.  The FOMC rate announcement day and press conference is 6/20/12.  Greece elections 6/17/12.  Euro summit 6/28/12.  If conditions continue to deteriorate further into deflation, the CRB is now under 280, the quantitative easing intervention is not far away, and 6/20 provides a target date for the coordinated announcement, if not sooner. Equity markets will soar and the bond yields for the safe haven countries above will rise once the easy money printing presses are turned on again for a summer rally. After that, in late summer into the Fall, around the elections, the globe will likely be in worse shape as the punchbowl goes empty again and everyone realizes that the money pumps have less and less of an affect.