Italian Bonds Slump Due to the Spread of Turkish Turmoil

Italy’s bonds led losses among euro-area sovereign debt markets as the Turkish currency turmoil fueled fears of a contagion effect across riskier assets.

Two-year yields climbed as much as 18 basis points to 1.34%, while those on their 10-year debt rose nine basis points to 3.09%. The spread over German 10-year yields increased seven basis points to 275 basis points. Spanish 10-year yields increased seven basis points to 1.48%.

French and Spanish banks are most exposed to a slide in Turkish assets with Italy and Germany next in line, according to the Bank for International Settlements. That could have a further knock-on effect on the region’s bonds, according to Morgan Stanley.

Source:

Bloomberg, John Ainger, 2018-08-13, “Italian Bonds Slump as Shock Waves From Turkish Turmoil Spread”