Spanish Bond Yields at 8 year low

Spanish bond yields have come down from 7.5 percent in 2012 during the height of the crisis to 3.5 percent now. This is a dramatic decrease with yields now at levels not seen years before the sovereign debt crisis erupted.

Matthew Phillips

2012 Euro Area Bond Yields

Compared to the beginning of the year, especially Greek and Portuguese, bond yields have come down quite a lot during the year. As is noted in the graph the Greek debt restructuring for Greek debt and the verbal commitment by the ECB president Draghi in July dampened the exit and breakup risk and hence brought down sovereign debt yields.

Where will the bond yields go in 2013?

The Economist

Scandinavia Versus The Euro Zone

The economies Sweden and Norway in Scandinavia grow faster and both have a lower unemployment rate than the average of the Euro Zone. Fiscal positions are also considrably better in Norway and Sweden. The manufacturing indicator is slowing down for these countries lately as well though.

Thompson Reuters

Dutch Economy in 8 Graphs

With the Dutch elections today this chart may come in handy. The Dutch economy is doing 'better' for most of the indicators than the Euro zone average. Late tonight (local time) the first estimation of the results are expected. A close result between the right party (VVD) and the left party (PVDA) is very likely. A colation needs to be formed to make the new government.

Reuters

French 10-year Bond Yield History

This graph from Bank of America shows the history of the interest rate of the French government. Besides the spike in borrowing costs during the French Revolution, what is also interesting is the continuous decline in interest rate since the 1970s.

Business Insider

Spanish 10-year Bond Yield History (1821-2012)

This graph shows the Spanish bond yield (10-year) history. The historical average interest rate seems to be around 8 percent. A rate, which the Spanish bonds haven't reached yet since the introduction of the Euro.

The Big Picture

Financial Markets Reaction to the Euro Zone Bailouts

Reuters made these great graphs which give an overview of the market reaction to the Euro Zone bailouts. The following indicators are shown: euro/dollar, Euro Zone banks, Euro Zone government banks and Euro Zone equities.

Reuters

Japanese Government Debt Approaching 250 Percent

Although the interest rate the Japanse government pays on its debt is one of the lowest, the debt it has is the highest debt as a percentage of GDP in the world.

Reuters

Euro Zone Bond Spreads Above Historical Levels Part 2 (Since 1970)

Three weeks ago I posted this overview of government bond spreads for the PIIGS compared to Germany:

http://www.economicsinpictures.com/2011/11/house-prices-around-world-us-house.html

That chart went back to 1990. This one goes back to 1970 and has much more data for Greece. You can see that in the 80s bond spreads were particularly high as well.

Euro Zone Downward Spiral Infograph

This chart perfectly pictures how the current economic forces and political decisions affect the Euro Zone crisis. Higher government debt ratios lead to fiscal consolidation on the one hand and higher bond yields on the other hand. Fiscal consolidation leads to less economic growth which leads to higher government debt ratios. Higher government bond yields lead to higher debt ratios again.

Bank bailout costs lead to higher government bond yields which lead to higher government debt. When banks need to raise more capital they can also decide to lend out less money to consumers, businesses and governments. This will hurt economic growth as well.

Something needs to happen quickly to stop this 'death spiral'.

Euro Zone Bond Spreads Above Historical Levels

This chart shows the Government Bond Spreads (difference between interest rates of 10 year government bodns of the selected countries verser the interest rate of german bonds). You can see that for some of the countries these spreads are higher than they were in the years before. So you may ask as the FT did: Why did we bother?

FT

Greek Bond Yield Roller Coaster (1993-now)

This graph from Der Spiegel shows the wilde ride of the 10-year Greek Government Bond yields. After the ratification of the Maastricht Treaty in anticipation of the introduction of the euro in Greece yields started to fall dramatically. Yields remained low until the Greek government announced the budget figures were significantly higher than previously reported, end 2009.

World: Safest Versus Riskiest Government Debt

This graph from The Economist compares two-year government debt bond yields in the world. On the left side the riskiest bonds are listed (with the highest interest rate) and on the rate sate the safest bonds. Notable is that two out of three of the three countries that have riskiest government bonds are in Europe. The three safest countries are in Europe as well.

Due to a request by the Economist this graph has been removed. 

View the graph here