In 2012, when markets questioned the ability of Greek, Irish and Portuguese governments to finance, the spread of the financing cost on Italy's second and German markets reached 5 percentage points for the 10-year titles. Creating and using a European funding mechanism, ESM, emergency credits from European and international institutions, and the intervention of the central bank through the famous message of doing "whatever it takes" to save the Eurozone , alongside liquidity interventions, later brought back the costs of funding including Italy and Spain later on. If, then, they were in the secondary plan, today they are in force, and the situation in Italy, which is heading for early elections, after the President's refusal to invite a government unfavorable to the Eurozone, occupies a high degree.
In the first days of May, interest rates in Italy for 10-year government securities were more than 1 percentage point below those in the US, with the differential rapidly eroding over the last few days, and today even a reversal: while yields in Italy have broken the level of 3% per annum in the US have deepened in their declines below 2.9%. Compared to Germany, the difference of more than 3 percentage points at the peak today is a multi-annual maximum.
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Chart yields state titles of Italy for 10 years. Source: bloomberg.com
The situation is still fluctuating: the head of the Italian Central Bank warned of the risks, insisting, however, that the most likely scenario remains of moderate growth and a gradual recovery (although at the level of producers, the data showed a decrease of 0.7% per month , and Italian consumer confidence dropped by more than 3 points to 113.7, according to Istat). Almost as a response to the pressure of rapid economic events (the scholarship lost more than 3 percent before partial rebounds), 5 Star leader di Maio said his party had never considered leaving the Eurozone. On the basis of current information, the emotional reaction has impacted short-term trends, but until possible new elections in Italy could be expected for months. On Friday, the motion of censure against the Spanish government on the other hand could be voted on. A positive correction could be imagined, but the horizon is not clear in the medium term this summer.