Political fears continue to hit Italian bonds, with yields rising further from Monday's close in early trading. Prime Minister Mario Monti's decision to resign, bringing forward upcoming elections, has reignited political uncertainty and pushed yields sharply higher during Monday's session. Moves are much more muted elsewhere, with spillover into other markets limited. "The BTP market is too complacent about Italian risk near term and medium term. The near-term risk stems from election noise but plays into a market where the investor base is already long," says RBS. Italy's 10-year yield is 6bps higher at 4.86%, while Spain's is up a basis point at 5.55%.
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