Global bond markets are pointing to risk-off, particularly regarding Italy

As the Dow Jones Industrial Average flirts with a 500 point decline, it's worth mentioning the flight to safety going on in the global bond markets. We are seeing major moves into sovereign bonds across currency areas. That has the US 10-year down 7.4 basis points today. And it also has the 10-year German Bund down 4.3 basis points. Australia, France, Spain and the UK are seeing similar moves.

The two countries bucking the trend that stand out are Japan and Italy.
The Italian situation
Japan's market is unique given the central bank's control over long-dated interest rates. So I wouldn't make too much out of the Japanese situation. The Italian move to 3.557% is an altogether different scenario. That's up 8 basis points when even the Greek 10-year bond is down marginally on the day to 4.31...


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