Mama Mia! Renzi’s Italian Fate Also Overshadows Draghi’s Route for QE (10Y Sov Rate Jumps 12 BPS)

The large ‘No’ victory in the Italian referendum has forced Prime Minister Matteo Renzi to announce his resignation. But Renzi’s defeat could spell trouble ECB President Mario Draghi.
(Bloomberg) Matteo Renzi might not be the only person this week to have his plans thrown up in the air by the Italian electorate.
His countryman Mario Draghi, president of the European Central Bank, will now have to take into account the scale of Renzi’s defeat in Sunday’s constitutional referendum – and resignation as prime minister – as the ECB evaluates its quantitative-easing program. The result has the potential to stoke market turmoil, widen bond spreads and depress the growth outlook, and so throw a spanner in the works of a finely calibrated monetary mechanism.

This post was published at Examiner on December 5, 2016.

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