Italian CDS spreads endure wild ride
Morgan Stanley strategist urges decisive policy response
Italy has emerged this week as the next big concern in the eurozone debt crisis, which has already sunk its teeth into Greece, Ireland and Portugal. The cost of insuring against an Italian default has risen sharply over the past seven days – from 194 basis points on July 5, to 300bp at yesterday's close. Spreads leapt higher this morning, but had narrowed to 294bp by 3.00pm London time, according to data provider Markit.
The growing fear of an Italian default has leaked into its banking sector –
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