Italy 5 year yield spreads blow out to record wides

Today we had one of the biggest ever days of peripheral sovereign bond buying from the SMP (Securities Market Programme), with some banks estimating that over €5bn of peripheral sovereign bonds were purchased via the ECB’s bond buying program in an effort to keep a lid on peripheral sovereign bond yields. About two thirds of these purchases were directed towards Italian government bonds, and Italy spreads still ballooned out to Euro era wides. The top chart shows the absolute yield levels of Italian and German 5 year government bonds, and the bottom chart shows the difference in the yields, or the yield spread.

Not great news.

Italy 5 year yield spread hits record wides
UPDATE : more of the same this morning, Italy 5 year yield at 6%, and yield spread over Germany 5 year has broken through 500bps

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