European Bond Yield Summary 11/13/12

It is time to start paying attention to the European yields again.  The Greece spat overnight is placing markets on edge.  The Spain 10-year yield is now approaching 6%. Spain has avoided asking for a bailout since the yields have dropped after the ECB's OMT bond-buying plan announcement.  However, the ECB cannot buy any bonds until Spain formally requests the aid.  It is understood that Spain will have to relinquish some sovereignty and agree to conditionality and oversight.  Rajoy will likey not request a bailout to at least beyond the Catalonia elections on 11/25/12 and likely into the new year.  The caveat is the yield.  As a rule of thumb, Spain will likely not request aid until the 10-year yield moves above 6.25% towards 6.50%. Thus, a 6% level will create increased tension.  Here are the rates;

10-Year Yields:
Greece 17.88%
Portugal 8.82%
Spain 5.92%
Italy 5.04%
France 2.12%
U.K. 1.72%
U.S. 1.58%
Germany 1.33%

Italy is above 5% and France is above 2%. Germany has dropped from over 1.50% to 1.33% over the last couple weeks. The U.S. has seen a drop from over 1.70% to 1.58% at the same time.  Money is flowing from equities into the perceived safety of German and U.S. notes and bonds (bond price up means yields move down). Watch Germany and the U.S. closely moving foward and most importantly, the Spain 6% level, since this will heighten worry and urgency across Europe.