Italian bond yields surge after Berlusconi vows to step down

11/9/2011 | Wall Street Journal, The · Bloomberg · Guardian (London), The

Yields on Italian bonds exceeded a key level of 7%, indicating that investors are losing confidence in the market. Yields jumped after Italian Prime Minister Silvio Berlusconi vowed to step down and LCH.Clearnet Group raised margins on the country's bonds. "The instability of Italy's political situation could increase market-anxiety levels before rates got even close to double digits, and at 7% or 8%, Italy could find it was unable to raise sufficient money on the bond market," said Laurence Boone, European economist at Bank of America Merrill Lynch. "In short, a confidence issue could turn into a liquidity issue."

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