Upward pressure on German government debt yields may lead to a change in perceptions in that country on how to deal with the Euro area sovereign debt crisis, according to Standard and Poor's.

It's "quite telling that recently there's been upward pressure on Germany," said David Beers, head of sovereign ratings at Standard and Poor's in Dublin today. "That may change perceptions there."

Germany failed to get bids for 35 per cent of the 10-year bonds offered for sale today, sending its borrowing costs higher and the euro lower on concern that Europe's debt crisis is driving investors away from the region.

"This auction is nothing short of a disaster for Germany," Mark Grant, a managing director at Southwest Securities in Florida, said. "If the strongest nation in Europe has this kind of difficulty raising capital one shudders concerning the upcoming auctions in other European nations."

Eoin Treacy's view The spread of Eurozone peripheral bonds over German Bunds have been expanding for at least three years. French and Belgian spreads began to expand over the last year and those of Netherlands, Finland and Austria have surged over the last few weeks.

Amidst a deepening sense of uncertainty, German debt has appeared sacrosanct. However, if quantitative easing is adopted the German state will bear most of the responsibility in terms of backing the ECB's bond buying program. The amount of money required is simply staggering and would come on top of massive unfunded pension liabilities. There are valid questions as to whether Bund yields at close to historic lows represent value. (Also see Comment of the Day on November 15th).

Bund prices failed to sustain the new high posted on November 10th and have fallen to retest the 135 area. This has been a notable loss of momentum and the odds have increased that a medium-term top is forming. A sustained move to new highs will be required to reaffirm the uptrend.