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Home / Business / The political unrest in Italy could mark the end of the EU crisis

The political unrest in Italy could mark the end of the EU crisis



However, it is unclear what might happen next. The yield on the 10-year Italian government bond rose from 2.6 percent on May 28 to 3.1 percent the next day, a sign of investor concern. Bond yields fell slightly to 2.9 per cent but are still at their highest levels since 2015. The euro has also fallen 1.2 per cent since May 22 and 3 per cent since January.

If Italy leaves the eurozone, said PNC Financial Services Group's co-chief investment strategist Amanda Agati – and there is a 5 to 10 percent likelihood of this happening – that would lead to catastrophe for global equities. The euro would also scratch.

Equities did not react as strongly as some expected after Brexit, but that could be different: it would be hard to see how the EU stays together and the euro survives an Italexit. "

" The EU should be a union, "Sheikh said," If anything weakens the union, that can not be positive. "

There is also concern that a political crisis in Italy could trigger another financial crisis. The country is the world's third-largest debt market with around $ 2.5 trillion in debt, owned by private investors, governments and central banks, including French and German banks, and the ECB, which holds about 20 percent of the country's outstanding debt

If bond yields are too high and the country can not make it, these bonds could default on their payments, causing investors around the world to lose massive sums of money, as well as the possibility of a bond sell-off ̵

1; Investors could try to give up Italian fixed income if they are worried about a default

"What about Italian A Lending has an impact on the entire financial system, "Sheikh said. "It's such a big market and everything (negatives) would hurt investor confidence."


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