These were the yields and movements on some of the most watched 10-year bonds by the close in Europe:

Spain: 6.67% (-4bp)
Italy: 5.94% (+3bp)
France: 2.52% (flat)
Germany: 1.27% (-9bp)
UK: 1.65% (-13bp)
US: 1.64% (-1bp)

bp = basis point or 0.01 percentage point

A failed Italian bond auction and the resignation of the governor of Spain’s central bank created an air of panic in debt markets through Wednesday.

Italy had aimed to sell EUR6.25bn in five and ten year bonds today, it only shifted EUR5.73bn – both maturities went at higher interest rates than at a similar auction last month.

Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned before the end of his term as criticism mounted of his handling of the nationalisation of the country’s third largest lender, Bankia.

German yields on 10-year debt fell to the lowest on record, while British gilts also rose dramatically as the betting now appears to be that Spain and possibly Italy will need Eurozone aid.

The terrors of last Winter have returned to debt markets with a vengeance and, currently the Europeans have no coherent solution to the chaos.

BS