Yields on Italy’s 10-year bonds rose to 7.11% this morning. The 7% level is a key dividing point — interest rates at or above that level are virtually unsustainable for governments.
Spain’s 10-year yields also rose to 5.63% in another sign that worries over Europe’s debt are rising again.
One good sign is that the Eurozone’s European Financial Stability Facility (EFSF) sold €3 billion in 3-year notes yesterday at a 149-basis point premium to German bunds. The EFSF notes attracted mostly European buyers, but Asian and British buyers were also taking part.
The message from the European bond market is mixed, at best, but at least that offers some encouragement.
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