Italian Bonds Remain Under Pressure

The 10-year yield is up 6.0 basis points on the day at 2.24%, but the MIB managed to move higher, after an upward revision to Q1 GDP and as the European Commission gave the initial go-ahead for a state funded rescue of Monte dei Paschi di Siena. The approval is conditional on confirmation by the European Central Bank and private investors that they will purchase the bank’s non-performing loan portfolio.

Italy’s parliament approved a government bid to increase public debt by up to EUR20 billion to fund a rescue package for ailing banks, and the issue acts as a reminder that the link between debts in the banking sector and government debt that triggered the initial debt crisis hasn’t been severed yet.