Wednesday, November 9, 2011

Italian bond yield chart: Hits all time high of 7%

Yields on 10-year Italian bonds rose to 7.4% on Wednesday (9th Nov 2011), as investors lost faith in the world's third-biggest sovereign-bond market. This is the highest ever yield seen on Italy's bonds.

The surge in yields came after clearing house LCH.Clearnet raised margin calls on Italian bonds, making them more expensive to trade. Portugal and Ireland were forced to seek financial bailouts after their bond yields exceeded 7%, a level many market analysts consider unsustainable.

The instability of Italy's political situation could increase the yields close to double digits in coming weeks. At 7% or 8% Italy could find it difficult to raise sufficient money on the bond market, and hence might require massive International financial assistance.

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