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.
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