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Friday, November 04, 2011 3:33 PM


Italian Bond Yields and Spreads at Euro-Record High; Massive and Growing 2-10 Inversion a Sign of Pending Portuguese Implosion


Following Threats of Troika Surveillance and Inspectors Headed to Italy to Verify the Italian Books it should be no surprise to find Italian bond spreads and yields surging to new highs.

Italy 10-Year Government Bond Yield




Italy 2-Year Government Bond Yield



Germany 10-Year Government Bond Yield




Germany 2-Year Government Bond Yield



European Sovereign Debt Spread Table 10-Year Bonds

Country10-Yr YieldSpread vs. Germany
Germany1.820.00
France3.051.23
Belgium4.382.56
Spain5.583.76
Italy6.374.55
Ireland8.216.39
Portugal11.8810.06
Greece26.7724.95


European Sovereign Debt Spread Table 2-Year Bonds

Country2-Yr YieldSpread vs. Germany
Germany0.400.00
France1.080.68
Belgium2.692.29
Spain4.253.85
Italy5.465.06
Ireland9.198.79
Portugal20.1419.74
Greece97.9797.57


Inquiring minds might be interested in what European spreads look like over time. Chris Puplava at Financial Sense graciously put together a few charts at my suggestion that shows this action. Thanks Chris!

10-Year Spreads vs. Germany Over Time


click on chart for sharper image

Recent Record Highs: Italy, Belgium, France

1-Year Spreads vs. Germany Over Time



click on chart for sharper image

Recent Highs: Portugal, Italy, France, Belgium, Spain

Note: Portugal does not have 1-year bonds. 2-year bond yield substituted

10-Year Minus 2-Year Yields, by Country




click on chart for sharper image

That massive inversion in Portuguese bonds with the 10-Year bond yield at 11.88% and the 2-year bond yield at 20.14% is a sign Portugal may blow sky high any time. Ireland recovered from a similar setup, Portugal failed to do so.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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