Italy borrowing rates hit record high

Graham_Devon

Seems the focus is moving on to Italy. (Where it should have been for a long time IMO).

The cost of Italian borrowing has risen in early trading as fears grow over political uncertainties in Rome.

The yield on Italian 10-year bonds rose from 6.37% to a euro-era high of 6.66%.

It is feared that Italy, the eurozone's third biggest economy, could become the next victim of the debt crisis. PM Silvio Berlusconi faces a crunch vote on public finance on Tuesday.

European shares also fell in early trade with markets in London, Frankfurt and Paris all down more than 1%.

Concerns over Italy are overshadowing developments in Greece, where Prime Minister George Papandreou has agreed to stand down.

http://www.bbc.co.uk/news/business-15617132

IronWolf

It's ironic when you think about it that the most likely cause of a crisis is if the bond markets think there will be a crisis and start demanding extremely high interest rates.

I wonder what Ed Balls thinks about this? Of course, he thinks the UKs interest rates are kept low by magic.

Wookster

The end is in sight.

This whole crisis has totally exposed how utterly useless Europe's mechanisms for decision making are. The European has the firepower to resolve this crisis definitively yet they are prevaricating and swanning off to China with the begging bowl.

Total lack of leadership.

gagahouse

Wookster wrote: »

The end is in sight.

This whole crisis has totally exposed how utterly useless Europe's mechanisms for decision making are. The European has the firepower to resolve this crisis definitively yet they are prevaricating and swanning off to China with the begging bowl.

Total lack of leadership.

I know, only the ECB has the necessary firepower and whilst the Germans believe there are no numbers between inflation of 2% and 1,000,000 % it will stay that way until they are forced otherwise.

Some believe there is 100bp of risk premium built into 10yr Italian debt while Berslusconi is at the helm. Will be interesting to see if the rumours doing the rounds that he will resign today or tomorrow actually bring yields down. This morning they peaked at 6.66% :eek:, up from 6.37 Friday, now down at 6.53.