Spanish bond yields jump above 6%, raising bailout fears

The cost of borrowing for Spain has jumped above 6%, once again raising the prospect of a bailout. The yield on Spain's 10-year bonds reached 6.1% for the first time since December 2012. The risk premium surged to 440 points and 5-year CDS reached 520 points ahead of Tuesday’s and Thursday’s debt auctions that could be increasingly expensive for Spain.

Investors have been worried by data showing that Spain's banks are entirely dependent on emergency ECB loans. If the ECB doesn't intervene soon by restarting its bond purchase program, Spanish 10-year bond yields might reach the psychological 7% level at which Greece, Portugal and Ireland were forced to seek bailouts. Italy continues to be dragged down by Span’s problems and on Monday the country's risk premium reached 382 basis points.

US retail sales beat forecasts in March as sales grew at a faster than expected pace, raising hopes that the economy has not slowed as much as feared as sales rose 0.8% last month, following February's revised increase of 1%. The US economy grew at an annual pace of 3% in the final quarter of 2011 and it is estimating a growth rate of between 2.5% and 3% for the first quarter of this year.

In the UK, House prices rose in March and April illustrating that Britain's property market has dramatically improved since the start of the financial crisis indicating broad stability in house prices. 

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