European Bond Yield Summary 7/9/12; Spain Over 7%; Euro Under 1.23

10-Year Yields:
Greece 25.75%
Portugal 10.18%
Spain 7.10%
Italy 6.15%
Belgium 2.75%
France 2.38%
Austria 2.10%
Netherlands 1.73%
U.K. 1.57%
Finland 1.53%
U.S. 1.51%
Germany 1.31%

Australia 3.00%
Japan 0.80%

Portugal 2-Year 7.67%
Portugal 5-Year 9.73%
Portugal 10-Year 10.18%
Portugal 30-Year 9.38%

Spain 2-Year 5.07%
Spain 5-Year 6.40%
Spain 10-Year 7.10%
Spain 30-Year 7.83%

Italy 2-Year 4.19%
Italy 5-Year 5.66%
Italy 10-Year 6.15%
Italy 30-Year 6.42%

Spain keeps blowing out above 7% signaling danger and that the Euro Summit was a failure. Markets wanted a bazooka and were delivered a water pistol. Draghi needed to deliver a pony but he arrived at the ECB rate decision meeting last Thursday on a donkey. Italy now moving well above 6% on its way towards 6.5% that will signal the wheels completely falling off. Conversely, Germany heads lower ready to lose the 1.3% level once again.  This action places the Spain-Germany spread at 579 well above Keystone's 520 level that signals European stress and turmoil. The Germany 6-month bill is negative with investors willling to lose a smidge of money in return for perceived safety and capital preservation.  The Italy-Germany spread is 484 now poking above Keystone's danger level of 470. Markets are losing confidence in the bungling European politico's. The France-Germany spread, the main gauge to monitor the European debt crisis, is 107, under Keystone's critical 125 level so watch this closely. If the spread moves above 125, that signals that a wheel just fell off the wagon.

Portugal remains inverted between the 5's and 30's and between the 10's and 30's. Watch the yield curve for Spain and Italy as well. The action shows the shorter duration, 2's and 5's, are gaining much faster in yield than the longer duration 30's. Eurozone Finance Ministers meet to finalize the Spanish bank rescue today. The euro, XEU, is at 1.2285, exploring the two-year lows. China says they are falling into a more serious downturn. Watch to see if the France-Germany spread moves above 125 which rings a bell that immediate intervention will be required. Also watch to see if the Spain 10-year yield moves towards record highs in the 7.20%'s, also if Italy touches the 6.5% level. Any of these three triggers will signal the end game.