June 6, 2018 / 1:20 PM / 17 days ago

Italian CDS jump 22 bps as markets wobble on ECB rate hike debate

LONDON, June 6 (Reuters) - The cost of insuring exposure to Italy’s sovereign debt rose on Wednesday following a wider bond market selloff on concerns that the European Central Bank could signal its desire to wind down massive stimulus as early as next week.

Italian 5-year credit default swaps (CDS) jumped by 22 basis points (bps) from Tuesday’s close to 231 bps - their highest level in nearly a week, according to data from IHS Markit.

“We had some hawkish ECB comments today and if you have doubts about the debt sustainability of Italy’s public finances, you have to have concerns if rates will rise sooner and funding rates will go up,” said DZ Bank analyst Rene Albrecht.

Money market investors are now fully pricing in a 10 basis point rate hike from the European Central Bank in July 2019, compared to October 2019 last week. (Reporting by Karin Strohecker, Editing by Abhinav Ramnarayan)

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