{"id":34417,"date":"2018-05-21T12:31:56","date_gmt":"2018-05-21T17:31:56","guid":{"rendered":"http:\/\/olduvai.ca\/?p=34417"},"modified":"2018-05-21T12:31:56","modified_gmt":"2018-05-21T17:31:56","slug":"hilarity-in-nirp-zone-italian-2-year-yield-still-near-0-as-new-government-proposes-haircut-for-creditors-and-alternate-currency-markets-on-knife-edge","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=34417","title":{"rendered":"Hilarity in NIRP Zone: Italian 2-Year Yield Still Near 0%, as New Government Proposes Haircut for Creditors and Alternate Currency, Markets on \u201cKnife Edge\u201d"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2018\/05\/21\/hilarity-in-nirp-zone-italian-2-year-yield-still-near-0-as-new-government-proposes-haircut-for-creditors-and-alternate-currency-markets-on-knife-edge\/\">Hilarity in NIRP Zone: Italian 2-Year Yield Still Near 0%, as New Government Proposes Haircut for Creditors and Alternate Currency, Markets on \u201cKnife Edge\u201d<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>The ECB\u2019s Negative Interest Rate Policy has been the funniest monetary joke ever.<\/strong><\/p>\n<p>The distortions in the European bond markets are actually quite hilarious, when you think about them, and it\u2019s hard to keep a straight face.<\/p>\n<p>\u201cItalian assets were pummeled again on mounting concern over the populist coalition\u2019s fiscal plans, with the moves rippling across European debt markets,\u201d <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-05-21\/italian-bonds-extend-slide-amid-concern-over-increased-borrowing\" target=\"_blank\" rel=\"noopener\">Bloomberg<\/a> wrote this morning, also trying hard to keep a straight face. As Italian bonds took a hit, \u201cbond yields climbed to the highest levels in almost three years, while the premium to cover a default in the nation\u2019s debt was the stiffest since October,\u201d it said. \u201cInvestors fret the anti-establishment parties\u2019 proposal to issue short-term credit notes \u2013 so-called \u2018mini-BOTs\u2019 \u2013 will lead to increased borrowing in what is already one of Europe\u2019s most indebted economies.\u201d<\/p>\n<p>This comes on top of a <a href=\"https:\/\/www.reuters.com\/article\/us-italy-politics-draft\/5-star-league-want-ecb-to-forgive-250-billion-euros-of-italy-debt-draft-idUSKCN1IG3EM\">proposal <\/a>by the new coalition last week that the ECB should forgive and forget \u20ac250 billion in Italian bonds that it had foolishly bought.<\/p>\n<p>The proposals by a government for a debt write-off, and the issuance of short-term credit notes as a sort of alternate currency are hallmarks of a looming default and should cause Italian yields to spike into the stratosphere, or at least into the double digits.<\/p>\n<p><ins class=\"adsbygoogle\" data-ad-client=\"ca-pub-8212587530282873\" data-ad-slot=\"1767955946\"><\/ins>And so Italian government bonds fell, and the yield spiked today, adding to the prior four days of spiking. But wait\u2026<\/p>\n<p>Five trading days ago, the Italian two-year yield was still <em>negative<\/em> -0.12%. In other words, investors were <em>still paying<\/em> the Italian government \u2013 whose new players are contemplating a form of default \u2013 for the privilege of lending it money. And now, the two-year yield has spiked to a positive but still minuscule 0.247% at the moment. By comparison, the US Treasury two-year yield is 2.57% over\u00a0<em>10 times higher!<\/em><\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Hilarity in NIRP Zone: Italian 2-Year Yield Still Near 0%, as New Government Proposes Haircut for Creditors and Alternate Currency, Markets on \u201cKnife Edge\u201d The ECB\u2019s Negative Interest Rate Policy has been the funniest monetary joke ever. The distortions in the European bond markets are actually quite hilarious, when you think about them, and it\u2019s [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1931,431,20195,1464,1768,1389,4254,4255],"class_list":["post-34417","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond-yield","tag-interest-rates","tag-italian-bond-yields","tag-italy","tag-negative-interest-rate-policy","tag-nirp","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34417","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34417"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34417\/revisions"}],"predecessor-version":[{"id":34418,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34417\/revisions\/34418"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34417"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34417"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}