European Bond Yield Summary 3/13/13

Europe remains calm as compared to the turmoil one year ago.  Fitch downgraded Italy the other day to bring the ratings in line with Moody's and S&P. Italy debt is only one level better than Spain debt. Both of these nations are too big too fail.  The Italy yield has been rising lately and is now approaching Spain's. Italy has based in the 4.5% area and is now printing 4.65%. Spain is 4.73% creating only an 8 basis point tiny spread. To place it in perspective, last July the Spain-Italy spread was about 120 basis points. France is very stable over the last few months hanging out at the 2%+ level. 

10-Year Yields
Greece 10.67%
Portugal 5.92%
Spain 4.73%
Italy 4.65%
France 2.10%
U.S. 2.01%
U.K. 1.96%
Austria 1.75%
Netherlands 1.74%
Finland 1.65%
Germany 1.47%

Greece is under 11%. Last July, only eight months ago, it was over 26%. Portugal is 5.92% dropping under 6%. Interestingly, three tiers are exposed above. The perceived safest havens, where much of Europe's money is parked, Austria, Netherlands, Finland and Germany.  Then the next tier is the cluster of France, the U.K. and the U.S.  Then the third tier is the troubled nations that walk on egg shells each day forward, Italy, Spain, Portugal and Greece. The spreads between the trouble nations and Germany remain calm. The U.S. 10-year is important today with an auction on tap at 1 PM EST. The yield is 2.01% as this is typed. Switching the discussion to the broad equity markets, the equity bulls want to see the yield climb higher while the equity bears want to see the 10-year lose the 2% level.