ECB Governing Council member Klaas Knot said today that “it’s quite pertinent that Italy actually complies with the rules” of EU on budget. Or, he warned that “if it doesn’t, the result is that spread will go up.”
For now, Knot saw limited contagion from rising Italian yields. He added “we’re not seeing an overall deterioration in credit conditions, we’re not seeing an overall deterioration in financial conditions”. And, “those would have to be the kind of things that we would first have to see before could contemplate changing our course of action.”
Italian 10 year yield hit as high as 3.547 earlier today and it’s now at 3.494, up 0.047.
