Italy Spreads Continue to Widen Out

This is a graph of Italian sovereign CDS spread movements over the past year. Spreads continue to widen out today with Italian 10 year debt trading at spreads north of 550bps versus German bunds. This is another sign that the markets are starting to force Europe's hands right now. Unless the European Union and European Central Bank are able to coordinate quickly and provide concrete details on a bailout agreement, this could continue to get very ugly. There is a lesson in all of this for US lawmakers, the market often does not wait for political cycles or elections. I truly hope that the budget committee realizes this and comes out with a substantial bipartisan proposal (>$3T) in the next week.