Irish 10 year government bond yields on Monday reached a new high of 7.1% (compared to a May-crisis peak of below 6%). Portuguese yields shot up to 6.10% (+0.15). All this on the back of the Franco-German proposal to “allow” bondholders to suffer losses in a future debt crisis (read: debt restructuring a.k.a. default).

Suddenly those who thought to be buying high-yielding Euro-bonds with the safety of eternal bail-outs are experiencing a rough awakening. The period of moral hazard, at least in Europe, might have ended.

Irish 10yr government bond yield. Source: Bloomberg.com

Portuguese 10yr government bond yield. Source: Bloomberg.com