Even though the mood in the bond market is calmer compared to the start of yesterday when Italian bonds slumped, the spreads are widening and that highlights investor concern surrounding the situation. The ECB wasn’t comfortable with the development last month so it will be interesting to see if they will come out to say anything this time around, although the circumstances are a little different.

It was all about fragmentation risks before but now Italian politics is adding another risky element to the picture.