Many thought that the Spain bailout would lift the markets higher, and it did temporarily.  Yesterday, 10-year rates on Spanish bonds dropped from 6.20% to 6.00% in the first few hours of trading, but quickly rose to 6.48% by the close.  This morning, the rate is already over 6.7%.  The bond market is voting and it is not a vote of confidence.  Also, Euro country citizens are voting with their pocket books as they flee from the Euro for US Dollars and Swiss Francs.  The yields on Swiss Government Bonds are at “panic levels” as the yield on shorter-term bonds are actually negative (the bond yield on a Swiss Government Bond due 6/5/2017 currently yields -.07%) and bonds maturing in 2049 currently yield a scant .95% (Swiss rates make US interest rates look spectacular).  This may be the end of the road and Europe must decide to either have full integration or elimination of the Euro.  Clearly, the markets don’t believe this bailout is a good sign of progress.

Sincerely,

Your THOR Team