Italian Bond Yields Plunge Most In 6 Years, Banks Soar As Tria Endorses Euro

Italian capital markets are en fuego (or whetever 'on fire' is in Italian) following, as we detailed earlier, Italy's new finance minister, Tria, gave a strong endorsement of the euro in comments over the weekend, prompting UBS to suggest that Italy's disagreements with the EU seem more likely to focus on immigration than on economics.

10Y Italy yields are down 30bps today along - this is the biggest daily decline since July 2012...

Italian 2Y Yields are down a stunning 63bps on the day...

Italian bonds and stocks surged while helping the Euro rise to session higher highs, after Tria told the Corriere della Sera newspaper over the weekend that there was “no discussion” of any proposal to leave the common currency and that the government would also block any market conditions that would “push toward an exit" (he would naturally say that having seen the recent rout in Italian bonds).

Tria's supportive comments have sent fears of Quitaly lower...

The BTPs that Italy's FinMin bought are now back in the money...

“This is the one of the first references on not letting the fiscal plan getting out of hand, and that the government will not let the BTP-bund spread get to the same wide level as back in 2011-2012,” Danske Bank's Arne Lohmann Rasmussen told clients. “We expect to see some stabilization in the BTP-bund spread.”

And as Italian bond yields plunge, so bank stocks soar...

So Italy is 'fixed' and all is well in Europe?

Not everyone is buying it... Santander GCB rates strategist Luca Jellinek posited that much of the move may have been due to short positions being squeezed out. “There were a lot of shorts in Italy,” he said in emailed comments. This rally is “way too much.”


el buitre Four Star Mon, 06/11/2018 - 12:48 Permalink

The new government does not wish to duplicate Hitler's strategic mistake.  One war front at a time.  When the immigration issue is resolved, then it's time for the debt / currency issue.  In the meantime they will continue with their "bot" rollout.  I don't know about Di Maio, but Salvini is no girlie man traitor like Tsipris. But he also has a much stronger hand.  The old saw that if you owe the bank a $Trillion, they have a problem.  The only viable strategy of the satanistas in Brussels is to drive a wedge between the two party coalition.


In reply to by Four Star

Endgame Napoleon TheSilentMajority Mon, 06/11/2018 - 11:04 Permalink

I don’t know whether or not I am staking my hopes on 3D chess anymore, but this trade-policy theater—with Trump challenging our better trading partners—might be some kind of 3D chess. The trading partners that create the massive trade deficits, soaking up both breadwinner jobs and potential SS contributions, are 1) China & 2) Mexico, not Canada, Japan and European countries. But this may be the 3D-chess element, probably a pro-Establishment / pro-investor-class 3D-chess move, rather than a pro-labor / pro-Deplorable 3D-chess move. But since a lose / lose for the investor class will probably morph into a lose / lose-cubed loss for the Deplorable class, I am really more concerned with the ending of wage-undercutting, welfare-buttressed, illegal immigration and a major, bigly cut in the number of non-merit-based, womb-productive & welfare-hoisted, legal immigrants who can afford to work for beans in welfare-for-womb-productivity households, holding down pay rates for non-welfare-eligible, single, childless citizens who face rent that consumes more than half of our EARNED-ONLY income.   

In reply to by TheSilentMajority

Mr Hankey ravolla Mon, 06/11/2018 - 10:59 Permalink

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In reply to by ravolla

LawsofPhysics Mon, 06/11/2018 - 10:46 Permalink

I am sure this is just global "investors" buying a good investment right? ...not some central banker/financier...


"Full Faith and Credit"

same as it ever was!

rex-lacrymarum Mon, 06/11/2018 - 21:51 Permalink

Italian citizens are among Europe's largest savers - I'm pretty sure a vast majority remains against readopting the perennially devaluing lira. I haven't seen recent surveys, but even at the height of the crisis staying with the euro had well over 80% support. 

Moreover, Italy's banking system is already crippled by €300 billion in NPLs - it cannot withstand unmitigated deposit flight.