The cost of servicing Italian debt is the highest in eight months

The cost of servicing the Italian debt rose to more than an 8-month high on Monday. The fact that Italian bonds were hit hardest by the sale of bonds in the euro area. This was due to concerns about the Italian government's reform efforts and the possibility that the European Central Bank (ECB) could slow down the pace of bond purchases in the coming months. Investors are increasingly anticipating that the economic recovery, supported by rapid vaccination against COVID-19, could cause the ECB to slow down the purchase of PEPP assets, from which Italy is particularly beneficial, as part of its emergency pandemic program. Italian government 10-year bond yields rose 6 basis points to 1.14 percent on Monday. They have already risen by 16 basis points last week. The risk premium on Italian bonds vis-à-vis German bonds increased to 123.65 basis points and was the highest since the end of 2020. The sale was exacerbated by weekend statements by right-wing League leader Matteo Salvini that Prime Minister Mario Draghi would not be able to accept the key reforms demanded by the European Union (EU) because his government was divided. The sale also affected the debts of other eurozone countries. Yields on 10-year French bonds rose above 0.3 percent for the first time since March 2020. German bond yields rose by 2 basis points to -0.11 percent. Yields on 10-year Portuguese and Spanish bonds rose by about 4 basis points and in both cases reached their highest level in almost 1 year.