BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Capital Markets

Italian 10-year bonds on course for worst month since 2012

Posted on November 18, 2016

Italian government bonds are set to suffer their worst month since the height of the eurozone crisis as nerves build in the run up to crucial referendum next month.

Italy’s 10-year bond yield has risen 49 basis points (0.49 percentage points) this month, as most polls show prime minister Matteo Renzi is set to be on the losing side of a vote on constitutional reform in another sign of rising anti-establishment sentiment in the continent. It marks the biggest sell off in Italian benchmark debt since May 2012 (yields rise when prices fall).

The country’s 10-year yield, is now comfortably above 2 per cent at 2.16 per cent, climbing to its highest level since July 2015 this week.

Fears over Italy’s political stability have heightened in the wake of Donald Trump’s shock victory in the US presidential election, with analysts fearing Italy could be the next major economy to feel the force of populist pressures at the ballot box.

Mr Renzi has hinted that he will not stay on as prime minister should the ‘Yes’ campaign lose out, and has ruled out heading up a technocratic government this week. His centre-left Democratic Party is facing down threats from populists such as the left-wing Five Star movement, which questions Italy’s membership of the euro.

Bond yields across the continent are rising today while the euro has fallen below $1.06 – marking its worst losing streak since it became the official accounting currency for the eurozone in 1999.

Portuguese 10-year yields have climbed to a nine-month high, while Spanish benchmark debt is on course for its worst month since June last year.