Spanish 5-year bond yields rise above 10-year

LONDON: Spanish five-year government bond yields rose above 10-year yields for the first time since June 2001 on Tuesday, as investors fretted about the possibility that Madrid may need a full-blown sovereign bailout.

Short-term yields rising above longer-term yields is usually a sign that markets think the risk of a credit event has increased.

Five-year yields were last 2 basis points higher at 7.45, while 10-year yields were 6 bps lower at 7.436 percent.

Bund futures were 80 ticks lower at 144.75, following Germany's outlook revision for Germany's rating to negative.

"Volumes are starting to pick up a bit, there's selling of Bunds across the board - by fast money, dealers and real money but there's no buying of the periphery," one trader said.

"I don't think this is the start of a bigger sell-off in Bunds, if the crisis gets worse then Germany is still going to be a safe haven."