European Bond Yield Summary 5/2/13; ECB Rate Decision

The ECB rate decision and press conference are on tap over the next couple hours.  European yields continue to drop and set records.  The OMT program, as well as the BOJ easy money, has served to calm yields over the last few weeks. However, the low yields are producing a complacency and lack of urgency in developing the necessary structural reforms to handle the European debt situation; a faux confidence that may lead to more trouble in the future.

10-Year Yields:
Greece 11.04%
Portugal 5.74%
Spain 4.13%
Italy 3.90%
France 1.70%
U.K. 1.68%
U.S. 1.64%
Netherlands 1.56%
Finland 1.47%
Germany 1.20%
Japan 0.57%

Greece was over 12% about one month ago and now down at 11%, 100 basis points lower. Portugal was well above 6% only about three weeks ago, now 25 bips under 6%. Across the board, all yields have moved lower over the last month except the U.K. which is flat in the 1.6%-1.7% range. Spain is now down near the 4% level and Italy is under 4%. Germany is only a few basis points from its all-time historic low. Despite the lower yields, Europe remains highly challenged moving forward. Slovenia's rating was cut to junk yesterday. The Greece and Cyprus woes continue. The Italy election escapades continue as their debt escalates. Portugal and Spain remain troubled. Any changes to yields will be watched in light of the imminent ECB decision.