Investor's window  |  February 27, 2013 13:55:50

Italian - yet not so big - problem

One direct consequence of the Italian elections this week was a significant increase in yields for Italian bonds. Ten-year yields jumped by half a percent to 4.9% shorter, two-year yields rose by 40 basis points to 2.1%. Despite the surge in revenues but are still relatively low. Last year in August, namely short and long bonds attacked the Italian border 5-6 percent in December of 2011, two years and even met ten-year yields above seven percent.  

However, in place of the fear that due to the post-election stalemate situation revenues continue to grow? Italy will be the most mini black swan that could frighten investors or so to start running again en masse to secure ports and cash? Hardly.

The game is still the European Central Bank and its promise to buy bonds in unlimited quantities, if need be. Only Italian bonds now have the ECB balance sheet of more than 100 billion euros in a situation where her half of European politicians criticizing that too is committed to a strong euro, the bank is not nothing easier than to restore the bond purchases and kill two birds one shot.

Italian elections and local public disgust with the current policy for the euro area in the long run, of course, a problem. Huge problem.However, similar problems brewing under the surface for some time in several countries and still probably be some time before actually at its insolubility float to the surface. Like much else in the market goes, so anyone interested in what will happen in a year, but what will be tomorrow. And until all the back covers institutions with theoretically unlimited resources, paradoxically or not such an important event as the true winner of the election in the euro zone's third largest economy side, which completely rejects the current establishment, considered a major obstacle.

Italian yield curve and its shift in time

Jaroslav Brychta

Jaroslav Brychta - principal analyst at X-Trade Brokers

  • He graduated from the Economic Policy at the Silesian University in Opava. The XTB operates since 2007, currently as chief analyst. It mainly deals with the analysis of exchange rates, as well as bonds, the banking sector and monetary policy. His professional articles and interviews contributes to most of the leading media.
  • Logo XTB X-Trade Brokers (XTB) is an international brokerage house that provides its clients with professional trading conditions for forex, commodities, stocks and options. Its services are constantly improving, as evidenced by a number of international awards and it is confirmed by the titles Broker Forex broker and year, obtained at the Investment Summit MoneyExpo 2012th

    In addition to the standard menu XTB allows Forex traders direct access to the market, thus enabling them to reach the lowest spreads. Novice traders in options may exercise the optionOptional already opened an account with a minimum deposit of 2500, - CZK . For XTB offers its clients advice on trading, 24 in the Czech language support, free training courses and daily news from the financial markets.

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