European Bond Yield Summary 6/1/12

10-Year Yields:
Greece 30.69%
Portugal 12.03%
Hungary 8.71%
Spain 6.59%
Italy 5.91%
Belgium 2.89%

France 2.27%
Australia 2.05%
Netherlands 1.61%
U.S. 1.53%
U.K. 1.51%
Finland 1.42%
Germany 1.16%

Bond yields are plummeting to new historic lows signaling that Europe is quickly losing control.  The Germany 2-year yield is negative so investors are actually paying Germany to hold their money. The U.K. 10-year gilt prints a record low at 1.50%; the record lows continue for the safer haven countries, Gemany now a shocking 1.16% yield. European money is frantically looking for a safe place to hide. Hungary is blowing out towards 9%.  Spain remains over the dangerous 6.5% level. Italy stumbles around 6%.

U.S. futures markets are dropping this morning ahead of the Monthly Jobs Report at 8:30 AM EST, less than 3 hours away.  The S&P's are down about 15 and the Dow Industrials futures are down triple digits. Yesterday markets recovered from losses on news that the IMF is in talks to provide Spain funding to support the troubled banks, but, the IMF is dampening the expectations stating that the meetings were only internal to the IMF. Rest assurred, there are frantic negotiations and planning occurring behind the scenes currently.

The Commodities Index, CRB, is now at 272 signaling deflation. Chairman Bernanke (Helicopter Ben that will drop money from helicopters if he has to) is committed to avoiding deflation (such as the Great Depresion and the Japan deflation now resulting in two lost decades) at all costs so the Fed, ECB, China, Japan, Germany and even the emerging countries are likely fine-tuning a global coordinated quantitative easing intervention to be announced at any time.

If the Jobs Report disappoints, markets will plummet, the SPX will likely violate the important 1292 level, and the QE3, LTRO3 and Japan and China coordinated stimulus will be announced at any time. If the Jobs Report is in line and equity markets calm down today, this will buy a few days more time before the QE is announced.  The FOMC rate decision and press conference is 6/20/12 so this serves as a bookend for when QE will occur. Thus, an exciting thirteen trading days are ahead starting with the jobs circus shortly. The European debt mess, and corresponding global contagion, is coming to a head now. Cancel your vacation plans until after June. If the quantitative easing intervention occurs, a summer equity rally will result, but the booze will likely run out again by Labor Day.  Each stimulus has less and less of an affect.