Strange market

Risk recovered overnight allowing EUR and AUD to basically close in NY around the previous Sydney opening levels. With focus now correctly targeting Italy in lieu of Greece – the picture remains bleak. Italian 10-yr bond yields rose above 6.50% overnight whilst the 10-yr Italian/German bond spread hit 460bps. The slippery road to the IMF cannot be far away now but it seems traders are more concern with the relief rally possibility rather than the doomsday scenario. This would depend on whether Berlusconi resigns but for the life of me I can’t see how this will change the Italian debt problem.