In Europe German bunds are considered to be the risk-free investment just as over here U.S. bonds are regarded the same way despite the so-called crisis about the debt ceiling. So when Italian bonds crept up on Monday to 5.5% from 5.2% on Thursday, there was concern. Likewise no one liked it when Spanish bonds crept up to 5.7%. And by Monday afternoon the Spanish bonds hit 6%, 3.24% above the rate on German bunds.
The crisis has reached a systemic level. It is clear. But is Germany expected to bailout all her sister countries in the EU? Stay tuned . . .