Analysts at Bank of America Merrill Lynch issued a stark warning over the mounting sovereign pressure on Italy, saying the size of the Italian bond market means that further deterioration could be a threat to the global economic recovery.
Without an expansion of the euro-zone bailout mechanism and a resolution of Italy’s internal political disputes, “the latest trend in the Italian bond market could potentially snowball into a major crisis for the global economy,” the broker said.
Italian and Spanish government bond yields continued to soar and the euro tumbled. Italian baks slump from
-6% to -8%.