Investors Shun Italian Bonds as Political Outlook Remains Cloudy
- Constitutional Court ruling plays against populist parties
- Best scenario is a political deadlock, Aberdeen says
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The Italian political outlook remains too cloudy for investors.
The yield spread on Italian 10-year debt over German bunds has risen faster than elsewhere in the peripheral euro area to 170 basis points, the highest since Dec. 5, the day after the rejection of former Premier Matteo Renzi’s reforms in a referendum. Italy’s Constitutional Court yesterday struck down parts of the country’s existing election law for the lower house, including a provision for a run-off vote, saying it should be held in just one round.