There is an enlightening Spotlight on European Government Bonds with Current State of the Sovereign Debt Crisis in Picture made by MISH'S Global Economic Trend Analysis.
I think his charts are showing clearly one thing: borrowing costs for EU countries are indeed rising. Actually also the US benchmark 10-year yield rose this week to the highest level in seven months as retail sales advanced in November more than economists forecast and the Federal Reserve said the recovery is continuing.
Inquiring minds may interpret the general rise in sovereign bonds yields in three ways: a) growth rates are expected to be higher (valid perhaps for US and possibly Germany where German bund yields have picked up by an almost commensurate amount as have Treasuries.); b) inflation is expected to be higher due to money supply increases and quantitative easing; c) the supply of sovereign bonds is getting above bond vigilantes absorption capacity and willingness to buy at certain levels of risk premia. In all circumstances it appears that debt and deficit to GDP ratios - c) to a) levels - matter to bond vigilantes.
However Mish concludes that any "plan for EU bonds has long been dead as France nixed the idea as well, and the charts show why: Germany and France do not want their borrowing costs to rise". Here I should clearly states that if German taxpayers hate bailing out their own banks they are already also bailing out profligate foreign governments (or indirectly national banks like in the case of Ireland) to bail out their own banks which made bad investments in PIGS sovereign bonds. Those who claim that EU bonds require some EU fiscal policy do not actually see that taxpayers are already being united by those strange mechanisms put in place to save banks...
To me the charts just show that borrowing costs are rising for everybody anyway, and that, together with other reasons, make the case for EU bonds issuances ever stronger. Should be evidence that Germany and France pay higher rates on their borrowing, I believe that a mechanism of compensation could be envisaged for the interest payments on respective countries EU bonds. It would instead be a pity if we discover that actually what makes EU yields to rise is exactly the unclear set up of the European Stability Mechanism and the perpetuation of the European Financial Stability Facility (EFSF), which might have moral hazard and an vicious circle intrinsic defects.