The ECB Must Stop the Rot in Italian Bonds
Letting yields climb too high will mean the Draghi put is dead.
Luigi Di Maio, left, with Giuseppe Conte. Next stop: President Mattarella.
Photographer: Filippo Monteforte/AFP
“Whatever it takes.” Those three symbolic words were uttered by European Central Bank President Mario Draghi in July 2012, and European bonds have benefited hugely from the “Draghi put” ever since.
Italy has revived existential questions about the bloc. The latest twist in this drama looks to be the agreement between the Five Star Movement and the League on a prime minister, and the prospect that President Sergio Mattarella will approve the selection, putting the coalition one step closer to actually governing. While the parties’ platform has had some seriously euroskeptic elements expunged, a decent share of it contravenes European Union rules on fiscal prudence. Investors are right to be worried.