Italian Sovereign Yields Are Approaching a Breaking Point: Chart

(Bloomberg) -- Italy’s populist parties are putting the country’s finances on an unsustainable track before even having spent a single euro. If government bond yields were to rise another 100 basis points -- after having climbed by that amount over the last two and a half weeks alone -- the country’s mound of debt would over time become too expensive to finance, according to Bloomberg Economics’ calculations. If the cost of funds faced by the Italian government were to rise to 3.5 percent, the debt ratio would be on an upward trajectory, a move to 4 percent would leave the number about 12 percentage points higher than it would have otherwise been.

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