Italian 10-Year Note Yield Spikes to 7.41%! Italy-German Spread is At 5.67 +14%, EUR/USD Smacked Down

EUR/USD (courtesy FreeStockCharts.com)

Italy's 10-year Note Yield rose 64 basis points to 7.41%, which is a new record high. It's been rising since it broke out in June-July and hasn't stopped. According to WSJ, Italy has $200 billion of their $2.63 trillion debt load maturing next year with a Debt/GDP ratio of 120%. Italian bonds are also selling off because LCH Clearnet SA, a clearing house, raised its margin rate on Italian bonds (read more at FT Alphaville). In addition, Italian Prime Minister Silvio Berlusconi offered to resign yesterday, so there is political drama as well (Bloomberg). As you can see, the Euro-zone crisis is in full effect, and everything is riding on the EU bailout plan (leveraged EFSF) to contain it.

An hour ago Ran Squawk reported that Italian CDS hit a record high at 536bps. See the CDS trend here, but it's delayed a day. The 10-year Italian-German Bond Yield Spread rose 14% to 5.67; EUR/USD is down 1.19% at 1.36615; and the December E-Mini S&P future is down 2% (via ino.com). Check out the charts below of Italian activity and the Euro/Dollar. It's getting interesting. Listen to what CLSA's Chris Wood said yesterday on Bloomberg. He thinks we're "reaching an end game in the Eurozone, but the only issue is how long it takes" (for fiscal union). He then said, "we still have the risk of a euro quake to force the Europeans over this hump." He also talked about the Fed, I will watch it again later. Zero Hedge has a post out titled: Barclays Says Italy Is Finished: "Mathematically Beyond Point Of No Return"", which says the ECB will need to print euros.

Courtesy of Bloomberg.com

Courtesy of Bloomberg.com