The imminent end of Prime Minister Mario Monti’s government fueled the largest increase in Italian borrowing costs in four months and threatened to open a new front in Europe’s crisis fight before a year-end summit.
Italian 10-year bond yields jumped 36 basis points to 4.89 percent at 12:18 p.m. in Rome, widening the difference between yields on German bunds of similar maturity by 38 basis points to 361 basis points. Italy’s benchmark FTSE MIB stock index fell 3.4 percent, while Germany’s DAX Index slipped 0.6 percent.
That was just the first surprise. The second was that Greece “claimed” that their bomb, er, bond buyback was “going well.” This morning we learn that they only received about half of what they claimed they wanted.
I hear a hiss, and I’m pretty sure it’s that pressure vessel over yonder called “Europe” that is at well beyond the “blow” point.
Of course in the time it took me to write this someone became convinced (for inexplicable reasons) that all was ok and the Euro took off against the dollar, “rescuing” the market.
Got lead-lined apron — and hat?