Jacques Cailloux, chief European economist for the Royal Bank of Scotland, said Monday that the Italian crisis represents “a new phase” in the financial crisis of Europe, and warned against a “domino effect.”
Yields on Italian bonds leaped from 5.2 percent yesterday morning to near 6 percent today -- drawing comparison to a similar spike last November in Ireland, a substantially smaller market. Safer German 10-year bonds -- the eurozone benchmark -- are yielding under 3 percent. The 300 basis-point difference, or spread, between the two reflects investor fears over the greater likelihood of an Italian default.
The EU meeting on Italy yesterday took place with little advance warning. European officials declined to call it a “crisis” meeting, though it was set in the wake of sharp stock falls in Italy Friday. The EU officials had gathered to discuss a second Greek bailout following a $150 billion package promised last year.