by Calculated Risk on 12/07/2011 11:28:00 AM

Not much news yet ... although the ECB is expected to cut interest rates ...

From the Financial Times: Germany insists on new treaty for Europe

Germany has thrown down the gauntlet to its European partners, insisting that they must agree on treaty change for the whole European Union, or at the least a binding new eurozone treaty, to bring lasting stability to the common currency, and reassure the financial markets.
Excerpt with permission

From the WSJ: Crisis Live Blog: Sarkozy, Merkel Issue Treaty Proposal

In an open letter to European Council President Herman Van Rompuy, Mr. Sarkozy and Ms. Merkel issued an ultimatum to the 27 EU governments, saying they must decide whether they will accept greater central control over their national budgets.

Should some countries decide not to participate, the 17 countries in the euro zone will press ahead with a more integrated union by signing a new agreement outside EU treaties, they said.

The Italian 2 year yield is up slightly to 5.6%, and the 10 year yield is up to 6.02%. Both were above 7% not long ago.

The Spanish 2 year yield is up sharply to 4.4%, and the 10 year yield is up to 5.44%. The ten year was at 6.7% on November 24th.