Yields on Italy 10-year bonds are rocking and rolling once again today, up 12 bps as I type, over a 20 bps in the last two days!
Regardless of the rhetoric out of Brussels, the final arbiter of the sovereigns’ likeliness to make good on their obligations is the bond market. And right now, the bond market is increasingly hitting the alarm button on Italy’s sovereign debt.
While Greece or Portugal may not be enough to take down the entire system, Italy’s cool $1 trillion+ of paper (at 120%+ debt to GDP) certainly is.
Hat tip Dr. Evil for helping in our continuing coverage of the ongoing European sovereign debt saga.