by Dave
Italian 10 year bond yields screamed up 48 basis points today on prospects of a new election in Italy. The Italian President (a holdover appointee from the PD) rejected the new LN/M5S finance minister over the weekend, and now the wheels are coming off the wagon.
It seems as though this was expected by Salvini – the selection of this particular minister candidate may have been his strategy to bring about a new election. If polls are any guide, M5S and LN will stand to substantially improve their position when new elections occur.
Armstrong has said for a long time now that the ECB’s bond-buying policy has destroyed the bond market in Europe, and as a result, there will be (is, now) a “no bid” situation when the market turns. A 48 basis point move in yield is a truly massive jump in a major economy’s 10-year bond.
Gold is flat in USD terms, but up 1% in Euros – EUR/USD is down 1% to 115.40, which is below Armstrong’s “monthly bearish reversal” – which if triggered (we’ll have to wait until Thursday to find that out), suggests that the Eurozone crisis we’ve all been waiting for may be upon us.
Bonds of all the PIGS are also selling off.
US 10-year rates plunged 11 basis points – TLT is up 1.67%. US bonds are a safe haven.