Curve Watchers Anonymous is taking a look at 10-year bond yields and bond spreads in the Eurozone.

Interest on 10-Year bonds in Italy are down from the spike high after the ECB stepped in with purchases as shown in the following chart. However, the chart also shows rates have inched back up and have now taken back about half of the ECBs effort.

Italy 10-Year Government Bonds

Spreads vs. Germany are another way of looking at things.

Here is a table I put together with data from Bloomberg as of Sunday evening.

Country 10-Yr Yield Spread vs. Germany
Germany 1.77 0.00
France 2.48 0.71
Belgium 3.90 2.13
Spain 5.16 3.39
Italy 5.41 3.64
Ireland 8.64 6.87
Portugal 11.14 9.37
Greece 20.55 18.78

While some countries have gotten much tighter (notably Ireland), others have gotten worse, notably France.

I asked Chris Puplava at Financial Sense if he could chart that idea over time. Greece is so far removed for other countries and it so distorted the charts we removed it.

10-Year Government Bond Spreads vs. Germany

On a spread-basis, the only country whose yields have collapsed is Ireland.

Italy, Belgium, France and Spain are at or close to spread highs. Also note how France is creeping up.

1-Year Government Bond Spreads vs. Germany

Portugal does not have a 1-year symbol so the math is not on a consistent basis with the others.

On 1-year spreads, Italy, Spain, and Belgium are at new highs, suggesting the ECB is losing the containment war on Italian bond yields.

Mike “Mish” Shedlock
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