Every time Italy’s new government so much as mentions euro membership, markets are likely to move. Bonds got a jolt and bank stocks traded near the day’s lows after comments on that subject from EU Affairs Minister Savona, even if what he said was fairly innocuous.
Here’s the Bloomberg headline:
*SAVONA REITERATES ITALY NEEDS TO BE READY IF OTHERS EXIT EURO
UCG is reversing big off that magical 15 level.
Euro Stoxx 50 Bank index, SX7E, also reversing rather ugly.
There is of course more to Euro Stoxx 50 than Italian Banks, but with volatility in free fall mode (after it was surging a week ago) we believe some cheap optionality is starting to look interesting.