The Italian dog that did not bark is one of the great untold market stories of the past month. The yield on Rome’s 10-year bonds is around 4.3 per cent, a level not seen since the end of January.
Chart: Italy’s 10-year bond yield (black line) over the past five years; blue line shows the yield on the German 10-year bund
(Chart courtesy Reuters)
The spread with the Bund, which has obsessed Italians since the market panic at the end of 2011, has narrowed to just above 300 basis points. It almost looks as if February’s inconclusive election and the accompanying political uncertainty do not matter. This is puzzling, so here are a few tentative explanations:
1) Mario Draghi’s magic. The pledge by the president of the European Central Bank last summer to do “whatever it takes” to save the euro is the single most important explanation for the relative quiet on Italy’s bond market. The Outright Monetary Transactions scheme, whereby the ECB will purchase unlimited quantities of debt of countries in difficulty, has so far proven a remarkably resilient firewall. Read more
Welcome back to our continuing coverage of the eurozone crisis. By Esther Bintliff on the world news desk in London, with contributions from FT correspondents around the world. All times GMT.
18.45 That’s all from the live blog for tonight, but you can keep up to date with all the latest news and analysis on FT.com. We’ll leave you with a summary of events today:
- Investors holding 85.8 per cent of Greece’s private debt agreed to participate in the country’s €206bn debt restructuring
- The Greek cabinet approved the use of collective action clauses (CACs), to force recalcitrant investors who own bonds under Greek law to take part in the swap
- Once the CACs are activated, participation will rise to 95.7 per cent, the level that Greece’s troika of lenders say is necessary if the country is to cut its debt to 120 per cent of GDP by 2020
- Eurozone finance ministers held a conference call, in which they agreed to release up to €35.5bn ($47bn) in bailout funds to help fund the debt swap
- Spanish trade unions voted for industrial action at the end of March
- And finally, the International Swaps and Derivatives Association began their meeting at 13.00 to discuss whether the debt swap constitutes a credit event, which would trigger credit default swaps. At the time of writing, we still didn’t know the answer.
Welcome to our continuing coverage of the eurozone crisis. Today’s summit in Brussels could, in years to come, be viewed as a turning point in the eurozone crisis. Or, it could be just one more extended meeting at which policymakers tried – and failed – to agree on a plan big enough to calm the storm in Europe’s sovereign debt markets. We’ll bring you news and commentary until the summit begins.
All times are London time. By Esther Bintliff and David Crouch on the world news desk in London, with contributions from FT correspondents around the world.
17.10: The summit is about to begin and we’re continuing in a fresh post: Eurozone crisis: the evening session.
16.45: A reminder of the timetable for tonight:
- 17.00 – 18.00 (London time): the leaders of all 27 EU member states meet
- 18:15 onwards: the summit of eurozone leaders begins
Statements and possibly a press conference are expected when the meetings close, but they will likely continue long into the night.
Stanley Pignal, Brussels correspondents, reports:
“EU leaders have been arriving for the first of tonight’s two meetings, which will involve all 27 member states before the eurozone-only leaders convene afterwards.