Italy Political Crisis Adds Pressure on ECB as Bond Rout Worsens
- Prime Minister Mario Draghi resigned on Thursday morning
- Yield on Italian 10-year note rose to its highest since June
Mario Draghi on July 20.
Photographer: Francesca Volpi/BloombergThis article is for subscribers only.
Italian bonds and stocks dropped after Mario Draghi resigned as the country’s prime minister, setting the stage for snap elections and threatening to unleash a fresh phase of turmoil for the nation’s debt.
The latest political crisis doesn’t just create uncertainty for Italy. It also ups the pressure on the European Central Bank, which is just hours away from announcing a new bond-purchase program intended to shield countries such as Italy from market speculation. It’s had to design such a tool as it prepares to increase interest rates for the first time in more than a decade.