Bond Yields in Italy Soar Again

Joel Anderson |

RBS, LYG, BCS, MS, WFC, Italy, Bonds, Yield, Bond Auction, France, Germany, Mario Monti, Angela Merkel, Nicolas SarkozyYields on Italian 6-month treasury notes again flirted with the 7 percent threshold that had previously taken down the governments of Greece, Ireland, and Portugal.

Rates Have Doubled in One Month

Italy's auction of $10.5 billion worth of treasury bonds saw yields reach 6.504 percent on 6-month notes, a borrowing rate nearly twice the 3.535 they were at just a month prior. It's the highest rate Italy has paid since August of 1997. Two-year notes saw yields reach 7.83 percent, 50 basis points higher than 10-year notes. The Euro slipped as a result, losing 0.9 percent to trade at $1.3213 by market close.



All told, this represents more bad news for the Euro Zone as Italian Prime Minister Mario Monti met with German Chancellor Angela Merkel and French President Nicolas Sarkozy on Thursday to discuss his country's mounting debt crisis. Monti told cabinet ministers today that Sarkozy and Merkel confirmed their belief that an Italian collapse would mean the end of the Euro.

Monti, tasked with salvaging Italy's woeful state of affairs, stressed earlier this week that austerity alone couldn't solve the problem and that economic growth was essential after a meeting with European Commission President Jose Barroso and EU President Herman Van Rompuy, stating “There’s no contradiction between rigor and growth pursued through structural reforms. Budgetary sustainability actually needs to be supported by greater economic growth.”

U.K. Banks Bounce Anyway

Despite the dreary news coming from bond auctions in Spain and Germany as well as Italy, stock in banks in the United Kingdom appeared to defy news and jump in value. After six straight losing sessions, the FTSE 100 index rose 0.7 percent with major banks leading the way. Royal Bank of Scotland (RBS) was up over 7 percent, Lloyd's Banking Group Plc. (LYG) leapt almost 4.5 percent, and Barclays PLC (BCS) gained just over 4 percent. On this side of the Atlantic, some American banks managed to get into the action as well, with Morgan Stanley (MS) posting a gain of just over 1.75 percent while Wells Fargo (WFC) rose almost 1.3 percent.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AGMPRC Federal Agricultural Mortgage Corp n/a n/a n/a 0
BCS Barclays PLC 11.22 0.01 0.09 2,349,800
MS Morgan Stanley 42.45 -0.41 -0.96 15,040,127
RBS Royal Bank of Scotland Group Plc New (The) ADS 5.44 0.01 0.18 789,486
LYG Lloyds Banking Group Plc American Depositary Share 3.22 -0.03 -0.92 20,796,152
WFC Wells Fargo & Company 54.58 0.31 0.57 20,906,892

Comments

Emerging Growth

Veritas Pharma Inc.

Veritas Pharma Inc, formerly Seashore Organic Medicine Inc is an emerging producer and distributor of medical marijuana.

Private Markets

Santo Diablo Mezcal

Santo Diablo Mezcal has been created to capitalize on a boom sector of the beverage market currently full of many small unmemorable products by producing one sexy, household, easily recognizable…

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…