A general rule of thumb is that whenever sovereign yields spike by over 10 basis points, it is a big deal.
So Italy and Greece 10-year sovereign yields spiking over 40 basis points this morning is a big deal! The third PIG (Portugal) is up 11.3 BPS.
For the 2-year sovereign debt, Italy is up over 153 BPS.
The PIGS sovereign yield curves are showing stress.
The cause of Italy’s woes? The rise of populist political parties such as the Five Star Movement.
PIGS refers to fiscally-troubled European nations Portugal, Italy, Greece and Spain with high debt-to-GDP ratios. Italy is second behind Greece and Portugal is third.