Is ECB intervention in the Italian and Spanish bond markets working?

Since Monday the ECB has been buying Spanish and Italian debt in the secondary market aiming to drive down the yields and hence ensure that both countries can afford to borrow from the debt markets.

The yields on both countries' debt had increased sharply in the preceding fortnight (post-the latest Eurozone crisis summit) in a pattern which has become strangely familiar over the past year - the yield hits 6%, the country denies there is a problem, it hits 6.5%, more denials and suddenly it is at 7% and a `bailout' is being arranged.

Whilst Ireland, Portugal and Greece represent 4.5% of EU GDP between them, Spain is 8.7% alone and Italy is 12.7%. They are too big to fail -  but also possibly too big to bailout.

If Italy and/or Spain were to require a bailout they would obviously not be able to participate in the EFSF - at which point the increased costs to France (in particular) would become perhaps insurmountable. In other words if one of these two go, the whole crisis coping mechanism goes with it. (Not to mention the fall out in the banking sector).

So - back to the original question, is the ECB intervention working?

As the yield demanded by investors has fallen from well over 6% to around 5% in both cases, it may appear so.

But in the CDS market (credit default insurance) a different picture emerges - one of continuing and rising concern for Spain and Italy.