Liontrust's Roberts: Where next for Italian bonds?

Before the Italian President Sergio Mattarella rejected the proposed eurosceptic finance minister Paolo Savona, many market commentators were saying that a yield of 2.5% for 10-year Italian sovereign bonds is a key level for the European Central Bank (ECB).

At that level, it is thought the bank would start to buy more bonds and prevent yields rising further - I said that would not be the case. In recent days Italian bond yields moved over 3%. Although a seemingly attractive all in level, I am not prepared to buy. Why? Well, why would ECB President Mario Draghi want to bail out Italian eurosceptic populists right now? Let Five Star and The League feel a little pain until they have formed a government: once they see the price to be paid for populism, it is much more likely they will work to stay in the system. Giving them an opportunity ...