Italian bond spreads surpass 400bp for the first time in this crisis
There is nothing magical about apparent threshold numbers, but a spreads of 400bp is awe-inspiring because it clearly signals a lack of sustainability. Italy’s ten-year yesterday briefly breached 400bp, before settling down to 391bp this morning – which is itself still almost 10bp higher than yesterday morning. The bond spreads rose after investors concluded that China is, after all, not going to bail out Italy. The deeper reason for the latest increase in the spreads is the growing realisation of a Greek bankruptcy and its effect on the other crisis-ridden eurozone countries, with Italy now in the firing line. Il sole 24 ore has a full account of yesterday’s events in the bond market.
(aus dem heutigen Eurointelligence Morning Briefing)