“Italian bonds fell for a second day as former Prime Minister Silvio Berlusconi’s political party threatened to stop supporting the government, risking the disintegration of the parliamentary coalition.
The decline pushed the 10-year yield up by the most in more than four months. Prime MinisterMario Monti survived a confidence vote after the head of Berlusconi’s People of Liberty party in the Senate said his group wouldn’t put the full weight of its support behind the bill. German bunds advanced for a third day after European Central Bank policy makers left interest ratesunchanged.
“Political risk has clearly increased in Italy today, even though Mr Monti survived,” said Nick Stamenkovic, a fixed- income strategist at RIA Capital Markets Ltd. in Edinburgh. “That’s undermined peripheral bonds, particularly Italy, and given a little bit of support to bunds.”
Italian 10-year yields jumped 11 basis points, or 0.11 percentage point, to 4.56 percent at 12:51 p.m. London time, after climbing as much as 18 basis points, the most since Aug. 2. The 5.5 percent bond due November 2022 fell 0.89, or 8.90 euros per 1,000-euro ($1,307) face amount, to 107.85. Two-year yields rose 12 basis points to 2.05 percent, after reaching 2.16 percent, the most since Nov. 21….”
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