Fears of less Federal Reserve stimulus are pushing eurozone bond yields back up and threatening to reignite the debt crisis.
And central banks may not be willing or able to rein in yields either, putting the burden on elected officials to act.
On Friday, yields for 10-year bonds from Spain and Italy hit the highest levels since early April, prompting the finance chiefs from both countries to downplay the rise as temporary.
But the spike comes as talks sputter on creating a banking union in Europe — intended to prevent future bailout fiascoes like Cyprus' earlier this year. Sweden said Friday there would be no deal unless national governments get more authority to wind down failing lenders.
Part of the yield rise stems from Fed Chairman Ben Bernanke's prediction Wednesday that quantitative easing will start to slow later this year. But banking union inaction is seen as a factor too.
"It has to do with the fact that the Europeans still don't have their act together," said Tu Packard, a senior economist at Moody's Analytics.
Reports that the International Monetary Fund could suspend Greek rescue payments added to the eurozone jitters. The IMF said there would be no financing problems as long as a progress review wraps up by late July.
At 4.62%, Italy's 10-year borrowing cost is still far below last summer's crisis level of more than 6%. Spain's 4.89% is also well short of the 7.6% peak reached in July.
The recent gains don't reflect a higher risk premium. Italian and Spanish rates are generally tracking the rise in 10-year Treasury yields since early May.
But if Spanish yields top 5% and stay above that level, Madrid's debt picture will become unsustainable again, Packard warned.
She doubts the Fed will intervene solely to help overseas markets, and last year's pledge from the European Central Bank to buy bonds in the event yields shoot up is looking shakier.
Eurozone markets had been easing, even without the ECB actually buying any bonds. But Germany's top court is now reviewing the legality of such purchases, and pushback from the hawkish Bundesbank appears to have eroded the ECB's resolve, Packard noted.
And with German elections in September, Chancellor Angela Merkel is unlikely to commit large sums of money to other countries.
The solution to higher yields might be the yields themselves, which should force politicians to take decisive action.
"You don't bite the bullet until the bullet starts to come whizzing by," she said.
The euro's decline vs. the dollar should help eurozone exports a bit, but the higher yields will worsen fiscal and economic conditions, said Win Thin, a currency strategist at Brown Brothers Harriman.
He believes the cause is primarily the Fed's stimulus outlook, which is having outsized effects around the world. The eurozone isn't in another crisis, but he will keep an eye on it.
"The last thing they need right now is higher rates," Thin said.