That’s Amore! Italy’s Yield Spread Over Germany Hits Highest Level Since 2013

When a moon  the yield hits their eye like a big pizza pie
That’s amore
When the the government spends like they’ve had too much wine
That’s amore
(Alarm) Bells will ring ting-a-ling-a-ling, ting-a-ling-a-ling
And you’ll sing “Vita bella” “We’re screwed!”

(Bloomberg) — A key barometer of risk aversion for Italy flared to the highest level in more than five years as the nation battles the European Union over its budget and faces the prospect of rating downgrades next week.

The extra yield that investors demand on Italy’s 10-year bonds over comparable notes in Germany rose to 324 basis points, the highest level since April 2013. Italy is due to widen its deficit to 2.4 percent next year, putting it in conflict with EU fiscal rules, while S&P Global Ratings and Moody’s Investors Service are due to review the sovereign rating by the end of this month. The nation is currently rated two notches above junk by both.

Italy’s 10-year yield rose 12 basis points to 3.67 percent as of 4:04 p.m. in London, while those on their German peers dropped two basis points to 0.44 percent. Italy’s Treasury conducted a 3.8 billion euro ($4.4 billion) buyback of inflation-linked bonds, selling five nominal notes in return, earlier Thursday.


Of course, the same countries that overspent before, Italy, Greece, Portugal and Spain all saw the most rapid rise today in 10-year sovereign yields.


And Germany’s 10-year yield is the second lowest in Europe.


Greece and Italy lead Europe in Debt-to-GDP followed closely by Portugal.


Dean Martin is the classic version of That’s Amore. The worst?

How Bad Is Europe Doing? 18 EMEA Nations Now Have Negative 2-year Sovereign Yields (Is Italy The Next Greece?)

Europe is facing Brexit (Germany), populist uprisings (Italy), perpetual gloom (Greece) and bad cars (France). So much so that the European Central Bank has their monetary stimulus at record levels.


It used to be only 16, but Europe, the Middle East and Africa now has 18 nations with negative 2 year sovereign yields. That is, 18 nations that require additional monetary stimulus.


Italy used to be a  member of the sub-zero EMEA club, but recent election and budgetary woes have sent Greek 2 year sovereign yields above zero.


Italy’s 10-year sovereign yield is also rising, second place behind Greece. But not as bad as Turkey, Nigeria, Lebanon and Russia.


Of course, Greece and Italy will need constant bailing-out of their fiscal woes. Along with other EMEA nations.

Here is a photo of a legendary French automobile, the Citroën 2CV.