Spanish Stocks & Yields; look at Italy

Since 5:30am, yields have been steadily rising in Spain and just over the past 40 minutes have spiked again. The 2 yr note yield is up to the highest since late May and just 2 bps from the most since Nov. The Spanish 10 yr yield is up another 5 bps to the highest since May 2000. Spanish stocks are also selling off by 1.4%. STD and BBVA are the two big Spanish banks to watch. I’ve seen no specific news to account for the weakness.

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Adding to my previous note, Italian yields are also spiking with the 2 yr yield up 12 bps to the highest since Dec ’08 and the 10 yr up 5 bps to 1 bps shy of the most since Nov ’08. Italian banks are also down sharply with Unicredit down 5.5% and Intesa down 4.9%. Both banks were down yesterday too after Moody’s put on credit watch 13 Italian banks. Thus, today’s pressure in both Italy and Spain seem to be a carry over from yesterday in that worries are building again in whether the EU can contain the debt crisis around Greece, Ireland and Portugal.

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