This would suggest that watching yields alone is a poor measure of anything. If one uses relative yields to infer expectations like inflation or risk, you have to add current yields to the cost of insurance. I wonder what inflation looks like if CDS spreads are added back. I imagine the answer is, as we feel, we are in the midst of the Great Stagflation.
CNBC.com Article: Loss of Confidence in CDS Means Trouble: Economist
The agreement on the size of the haircut on Greek debt banks will take could have serious consequences for all the so-called PIIGS according to Carl Weinberg, the chief economist at High Frequency Economics.