Recent events reminded us that a week is indeed a long time in Italian politics. Our measure of the market-implied probability of an Italian exit from the single currency peaked at more than 20% last Tuesday, before falling back to around 10% by Friday as it became clear that a coalition government would be formed. The sharp swings in the Italian bond market last week, which doubtless gave investors a few sleepless nights, highlighted the fragility of a government formed...
![Italy – the relative calm after the storm](https://www.fathom-consulting.com/wp-content/uploads/2018/06/18_05_30_EA_Default-Euro-area-market-implied-probability-of-default.jpg)
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