Germany is caught between a rock and a hard place. If she rides to the rescue of her neighbours, she will undermine her own credit standing. If she chooses not to, the euro-zone will probably collapse. This unsavoury dilemma had already led to us to forecast some upward pressure on Bund yields in 2012 and 2013 as the euro-zone crisis escalated. However, it now looks as if the pressure is coming to bear earlier than we had envisaged. We doubt it will relent any time soon.