Maleficent 7: Spanish Bond Yields Enter Danger Zone

LONDON (Reuters) - Spanish government bond yields rose above 7 percent on Thursday after Moody's cut the Spain's credit rating to just one notch above "junk", pushing borrowing costs ever higher and raising the prospect of a full-scale bailout. Moody's slashed Spain three notches to Baa3, its lowest investment grade rating, and said it could lower the rating further within the next three months. It said the newly approved euro zone plan to help Spanish banks would increase the country's debt burden. Yields on Spain's 10-year bonds rose as much as 25 basis points to a euro-era high of 7. ...

CNBC asks So Why Are Spanish Bond Yields Falling? Well, that's a good question. Short answer: Well rates spiked dramatically, and we are seeing some retracement from the psychological balm of even more liquidity thrown from the global central planning cartel, otherwise known as the central banks.

The sell-off in government bonds has gone completely global as concerns over Federal Reserve tapering of monetary stimulus infect the market. Everywhere this morning, bond yields are up huge as investors dump sovereign debt. In the United States, the 10-year yield is up 6 basis points to 2.26%, its highest level in over a year.

The selloff on Spanish and Italian bonds continued today with yields in Spain hitting euro-era record highs. On the deficit side of matters, I do not believe Spain will meet its budget-deficit targets, and neither does Fitch. Fitch Managing Director Ed Parker said Spanish Prime Minister Mariano Rajoy will miss budget-deficit targets this year “by a substantial margin.” according to a Bloomberg report.

Spanish Bond Yields Back Above 6% Yield on the 10-year Spanish bond is up 22 basis points to 6.06%, having hit a high of 6.08%. It's Not Contagion

BOND YIELDS UP: Investors pushed up Spanish borrowing rates past 7 percent, to the levels where Ireland, Portugal and Greece sought bailouts. Investors are worrying about Spain's fundamental economic problems.

An official for the Bank of Italy says Bonds Bids, Offers Show Government Bond Market "Frozen". Spreads between bid and ask government bond prices indicate markets are “frozen,” said Franco Passacantando, Bank of Italy’s Managing Director for Central Banking, Markets and Payment System in Milan today.

Italian and Spanish 10-year bond yields hit fresh euro-era highs, safe-haven German bunds and U.K.