Italian 10 Year Bond Soars Past 7%

Italian 10 year bond gross yield was up over 10% on Wednesday as investor fears mounted that the Euro zone’s third largest economy could very well experience a debt crisis similar to that of Greece.

Berlusconi Loses Seat

Following a crucial victory in passing the budget vote on Tuesday, Prime Minister Silvio Berlusconi is facing resignation after losing his parliamentary majority.

Eight members of his own party defected yesterday, effectively removing the leader from his post after two decades as Prime Minister. Following a meeting with Giorgio Napolitano, a statement was released by the Italian President claiming that Berlusconi will resign following the approval of economic reforms by parliament.

A Poor Outlook For Italy

Italian debt sits currently at €1.9 trillion, approximately 120% of their GDP, following average growth of less than 1% annually over the past decade.

As debt mounts and uncertainty in the government increases, the 10 year bond yields hit approximately 7.4% in the early afternoon on Wednesday. This figure is well past the 7% mark that economists claimed is the level beyond which the bond market is unsustainable.

Italian 10 year bonds severely underperformed similar German bunds, pushing spreads to 571 basis points by the early afternoon.

FTSEMIB DOWN

Euro Falls Against Dollar

The Euro was down 1.5% on the dollar on Wednesday after the Italian 10 year bond hit 7%. Investors have increased the sale of the euro as the European debt crisis escalates, also finding refuge in the Japanese Yen, which was also up 1.5% by the early afternoon.

European Stocks Down

With the spread between Italian and German bonds at its highest since the euro was introduced, the Italian government in turmoil, and the crisis in Greece still searching for a solution, stocks dipped across Europe on Wednesday. The FTSEMIB in Italy was down 3.6% on Wednesday while the FTSE100 dropped 2%, and the Euro STOXX 50 was down 2.7% by 1:00 pm.

References
↑ Italian Bond Yield
↑ The Last Days of Silvio Berlusconi
↑ Berlusconi announces imminent resignation as Italy’s Prime Minister
↑ Euro sells off as Italian 10 year bonds pass 7 percent
↑ Italy 10 Germany 10 Spread
↑ Euro vs Dollar ADVFN
↑ Yen vs Euro ADVFN
↑ FTSEMIB
↑ FTSE 100
↑ Euro STOXX 50

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

WHAT IS ADVFN?

ADVFN covers all things stock market.

From the news and opinion pieces on pages like this to share discussion forums, charting tools, financials, live share prices and Level 2, order book data

If you trade or invest ADVFN has the tools you need to make the right decisions.

• 

  101 Ways to Pick Stock Market Winners

  You need the number one bestselling investment guide, the definitive text for day traders, investors and stock pickers.

• 

  The Death of Wealth

  Dissecting the global economy and the financial markets, the book lays out the evidence for the next economic game changer: the Death of Wealth.

• 

  Ed Liston

• 

  Thierry Laduguie

• 

  Francois Normandeau

• 

  Capital Spreads