European Bond Yield Summary 1/1/13

The European bond yields were of grave concern in 2012 but once Draghi pledged to support the euro by all means necessary in July, the situation improved, and now, Spain continues to talk about not requesting a bailout.  It was all but certain that Spain would need a bailout a few months ago. In actuality, nothing has changed. Greece, Portugal, Spain and Italy all remain in trouble. Europe needs growth, especially since the Germany powerhouse will likely slip into lower growth moving forward. Therefore, Draghi should cut rates in early 2013 which will weaken the euro. The Greece 10-year is under 12% when it was over 20% this past year.  The Portugal 10-year yield is 7.01%. The Spain 10-year is 5.27% and Italy 4.50%.  Germany is at 1.32% showing that it remains a perceived safer haven along with the Netherlands and Finland. These yield levels serve as points of reference for 2013. The inverted yield curves for Portugal and Spain in 2012 have returned to normalcy, however, Europe remains in recession and Greece, perhaps Spain, are in a depression.  Japan will be an interesting story in 2013 now that it is committed to weakening the yen.

10-Year Bond Yields:
Greece 11.90%
Portugal 7.01%
Spain 5.27%
Italy 4.50%
Australia 3.27%
France 2.00%
Austria 2.75%
U.K. 1.83%
U.S. 1.76%
Finland 1.53%
Netherlands 1.50%
Germany 1.32%
Japan 0.79%