Those wondering when the yield on Spain's 2-year government bond would exceed 7% now have an answer. Today is the day.

Note: the lines on the charts below reflect yesterday's close. The numbers in green accurately reflect today's price movements.

Spain 2-Year Government Bond Yield

Of further interest please note the inversion at the long end of the curve. The yield on 5-year treasuries now exceeds that on the 10-year treasury.

Spain 5-Year Government Bond Yield

Spain 10-Year Government Bond Yield

Synopsis

2-Year Yield + 36.5 basis points to 7.007%
5-Year Yield + 12.5 basis points to 7.717%
10-Year Yield + 2.7 basis points to 7.648%

The inversion is slight but the massive yield increase on the shorter end is significant. If this action continues, and I expect it will, the market is pricing in a sovereign debt restructuring of Spain, including bond haircuts.