Bond Report: Italian bond prices drop, yields surge after referendum defeat

Investors sold Italian government debt Monday after Prime Minister Matteo Renzi announced his resignation following a crushing defeat in a constitutional referendum, ushering in a period of heightened uncertainty in the eurozone’s third largest economy.

Government bonds were a notable black spot in markets Monday, as European stocks climbed and the euro pared earlier losses.

Italian bond yields rose sharply as prices fell, while debt from other riskier countries such as Portugal and even France underperformed versus Germany, Europe’s largest economy.

The gap in yield between 10-year Italian TMBMKIT-10Y, +5.93% and German debt TMBMKDE-10Y, +22.58% widened by around 0.07 percentage point to 1.702 percentage points in early European morning trade, according to Tradeweb.

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