Markets Convulse as Italy Is Seen on Course for New Elections

  • Sovereign bonds, stocks decline after erasing opening rallies
  • President asks economist Cottarelli to form a government
Italian politics weighs less on the euro than interest-rate differentials, says Julius Baer Economist David Kohl.Source: Bloomberg
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Chaos ruled Italian markets as the nation plunged deeper into political turmoil.

Yields on the nation’s two-year bonds surged to the highest in four years in holiday-thinned trading, while stocks slumped for a fourth day as President Sergio Mattarella asked economist Carlo Cottarelli to form a government to pave the way for new elections due as early as the fall. Earlier, League leader Matteo Salvini said Bloomberg Terminalthat it made no sense for Italy to remain in the European Union unless the bloc rewrote its rules.