Wednesday, July 27, 2011

Europe Update

by Bill McBride on 7/27/2011 11:06:00 AM

It looks like they're going to need a bigger bailout ...

From Reuters: Italian banks fall as Italy/Bund spread widens

The Italian BTP spread over German Bunds expanded by 15 basis points to 305 basis points early on Wednesday. The BTP/Bund yield gap was at around 290 basis points late on Tuesday
Here is a graph of the 10 year spread (Italy to Germany) from Bloomberg. This is probably the key graph to watch right now.

And from CNBC: S&P Expects Second Greek Haircut, New Downgrade
A new and bigger restructuring of Greek debt is likely within the next two years, an official from credit ratings agency Standard & Poor's said on Tuesday, adding a further downgrade of Greece's sovereign debt rating was "pretty certain."
Here are the links for bond yields for several countries (source: Bloomberg):

Greece2 Year5 Year10 Year
Portugal2 Year5 Year10 Year
Ireland2 Year5 Year10 Year
Spain2 Year5 Year10 Year
Italy2 Year5 Year10 Year
Belgium2 Year5 Year10 Year
France2 Year5 Year10 Year
Germany2 Year5 Year10 Year