“Spicy Italian” politics sure took a bite out of the financial markets last week. After the populists ended up ascendant in the recent Italian election, the proposed coalition government composed of the anti-establishment Five Star and right-wing League parties failed on the Launchpad. Doubts over their commitment to the EU resulted in an abrupt Presidential repudiation and a potential constitutional crisis. Italian bonds, the Euro and risk assets around the world plunged on the unlikely prospect of an Italy outside the EU. Bond yields dropped on the “risk-off” market sentiment in other countries, including the US.
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Canso June 2018 Corporate Bond Newsletter
