Italian Yields Surge at Near-Term Auction, Curve Signaling Potential European Recession
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Stemming from investor concerns and macro uncertainty, Italy's cost to borrow marked new records in its most recent auction.
Two-year Italian bond yields rose to around 7.7 percent while five-year yields pushed over 7.8 percent. By comparison, the same auction held in October had Italian investors paying 4.628 percent. Two-year notes hit a record high of 8.304 percent on November 9th.
Yield on the six-month auction jumped from 3.535 percent in October to 6.504 percent with this latest offering.
Yields above 7 percent are generally regarded as unsustainable.
Bond prices have the yield curve looking inverted -- when shorter-maturity bonds carry higher yields than longer-term offerings -- indicating investors are pricing-in a potential European recession.
Ahead of the open Friday, EUR/USD is 0.95 percent lower to about €1.3218, a level not seen since early October.
Dow futures are currently indicated down about 50 points, the Nasdaq is down more than 9 points, and the S&P 500 is down about 5.
Two-year Italian bond yields rose to around 7.7 percent while five-year yields pushed over 7.8 percent. By comparison, the same auction held in October had Italian investors paying 4.628 percent. Two-year notes hit a record high of 8.304 percent on November 9th.
Yield on the six-month auction jumped from 3.535 percent in October to 6.504 percent with this latest offering.
Yields above 7 percent are generally regarded as unsustainable.
Bond prices have the yield curve looking inverted -- when shorter-maturity bonds carry higher yields than longer-term offerings -- indicating investors are pricing-in a potential European recession.
Ahead of the open Friday, EUR/USD is 0.95 percent lower to about €1.3218, a level not seen since early October.
Dow futures are currently indicated down about 50 points, the Nasdaq is down more than 9 points, and the S&P 500 is down about 5.
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