How high does the yield on Spanish bonds have to go before European authorities act and bail the country out?
The received wisdom is that when the yield, or interest rate, on government borrowing reaches seven per cent then it is too expensive.
Spanish yields have been edging higher this week and, as I write, are at 6.60 per cent. So there's time yet?
Richard McGuire at Rabobank begs to differ. In a note this morning he writes:
"... we believe that it is more important to look at the spread over [or the difference between Spanish yields and those of] Germany, where Spain is already at its highest since the beginning of the Euro era...
"After all, Bund [German government bond] yields are considerably lower than when action was taken with regards to Greece, Ireland and Portugal and so the reference point for the seven per cent level has moved."
In other words: tin hats on! If this crisis goes to the next stage, it may happen sooner rather than later.