Wednesday, 30 May 2018 08:52

What Italy’s Astonishing Yield Surge Means

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(Rome)

For those who consider themselves students of the market, yesterday was a real whopper. Short-term bond yields can usually be seen as a proxy for cash. But in a truly astonishing move, Italian two-year yields rose an amazing 1.5 percentage points yesterday (150 bp) to 2.4%. By comparison, other southern European yields, such as Spain, moved just 12 bp. Markets are worried about a massive Italian default, and possibly the redenomination of bonds into Lira.


FINSUM: When you get right down to it the panic here is not just about a default, but about a breakup of the Euro. We have always said it would be Italy to leave first, and the major question is whether others would join them when that happened.

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