The good mood on the stock exchanges due to the resumption of Russian gas supplies via the Nord Stream 1 pipeline did not last long. This time the definitive resignation of the Italian Prime Minister Draghi is causing a great deal of nervousness on the markets. In Italy, the yield on ten-year government bonds rose to a good 3.6 percent, the highest level in three weeks. The increase in yields is a big problem for the Italian state because it increases debt service – and Italy is heavily indebted. However, it is also difficult for Italian banks, which traditionally hold large amounts of government bonds in their portfolios. The higher the interest rates, the lower the value of the bonds. The stock exchange in Milan falls under the impression of the current development by two percent.
Italy also a problem for ECB rate hike
The European Central Bank is also concerned about Italy. Today the ECB plans to raise interest rates again for the first time in eleven years. However, a hike now could put additional pressure on the Italian economy. This is also why the ECB is discussing a new crisis instrument to help highly indebted members. The uncertainty about Italy is also reflected in the leading German index DAX. It is half a percent weaker at around 13,200 points.