Financial Earthquake: Italy 10yr Bond Yield Soars Above 7.4%! Barclays Says Italy Is Finished: “Mathematically Beyond Point Of No Return”!
- Major financial earthquake is happening now. Italian 10 year government bond yield has soared from 6.7x% to 7.4x%. Stock markets across Europe and S&P futures are tanking! This is one terrifying collapse of the Italian bond market! The game is up for the Eurozone. It will be interesting to see what rabbit the politician snakes can pull out of their asses to rescue Italy. Otherwise, the dominoes will start falling and will cascade across Europe!
Barclays Says Italy Is Finished: “Mathematically Beyond Point Of No Return”!
by Tyler Durden, http://www.zerohedge.com/
… already someone has done the math on what the events in the past several days reveal for Italy. That someone is Barcalys, the math is not pretty, and the conclusion is that “Italy is now mathematically beyond point of no return.” Summary from Barclays Capital inst sales:
1) At this point, it seems Italy is now mathematically beyond point of no return
2) While reforms are necessary, in and of itself not be enough to prevent crisis
3) Reason? Simple math–growth and austerity not enough to offset cost of debt
4) On our ests, yields above 5.5% is inflection point where game is over
5) The danger:high rates reinforce stability concerns, leading to higher rates
6) and deeper conviction of a self sustaining credit event and eventual default
7) We think decisions at eurozone summit is step forward but EFSF not adequate
8.) Time has run out–policy reforms not sufficient to break neg mkt dynamics
9) Investors do not have the patience to wait for austerity, growth to work
10) And rate of change in negatives not enuff to offset slow drip of positives
11) Conclusion: We think ECB needs to step up to the plate, print and buy bonds
12) At the moment ECB remains unwilling to be lender last resort on scale needed
13) But frankly will have hand forced by market given massive systemic risk
Hint:Not Good.Sell EUR, Buy Gold
The broader referenced report can be found here.
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