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.
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.