Yields for 10-yr government bonds rose to unsustainable levels above 7.0%.

Meanwhile, Italian yields also moved steadily above 6.0%.

The EU summit 2 weeks ago (6/28-6/29) established a way to bailout Spain's banks without adding sovereign debt and also set a goal to bring down the 10-yr Italian bond yields back to 4%.

 

The next step for Spain's bank bailout to occur is setting up of a single banking regulator under the ECB. Also, the EU summit agreed on using the ESM to purchase government bonds in the secondary market.

The initial optimism from these agreements have worn off.

We have a meeting of the Economic and Financial Affairs Council (ECOFIN ) tomorrow 7/10. Will a meeting between finance leaders revive any hope for salvation of the European union from the debt crisis, or will it reveal complications and bickering between the core and peripheral nations?

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of rex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.