Investors Jittery as Spanish, Italian Bond Yields Continue March Higher

June 12, 2012 8:17 AM EDT
Yields on Spanish and Italian bonds are higher again this morning, and it has U.S. equity markets on edge. The current yield on 10-year government bonds are 6.617 and 5.974 for Spain and Italy, respectively.

Many investors are now speculating that the Spanish bailout doesn't go far enough considering how far out of hand the crisis has gotten. Despite the bank bailout, the country is expected to shrink 1.7 percent while the unemployment rate is expected to move higher. There is a growing fear that Europe doesn't have the firepower to solve the crisis.

A Dutch government bond auction today fetched €1.65 billion which was at the low end of the scheduled range. Meanwhile, credit default swaps on Spanish debt tapped a new high.

Italy is scheduled to auction up to €4.5 billion of three and seven-year bonds Thursday, in what will likely be another test for the bonds market in Europe.

SPDR S&P 500 (NYSE: SPY) is trading slightly higher pre-market despite the jitters.

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