German bunds jump on scarred global risk sentiments, Italy’s burgeoning banking crisis

The German bunds jumped during European session Thursday following charred global risk sentiments and Italy’s burgeoning banking crisis, sitting on a pile of heavy debts.

According to a report from the Australian Financial Review, Italy is on the brink of a dangerous banking crisis as the red-blooded showdown between Brussels and Rome pushes the country's borrowing costs to a five-year high.

The German 10-year bond yields, which move inversely to its price, plunged 4-1/2 basis points to 0.505 percent, the yield on 30-year note also slumped 4-1/2 basis points to 1.125 percent and the yield on short-term 2-year traded 1 basis point lower at -0.561 percent by 09:30GMT.

Yields on Italy's 10-year debt spiked nearly 9-1/2 basis points to 3.602 percent after the League strongman and Deputy Prime Minister, Matteo Salvini, vowed to sweep away the existing European -order. He called Jean-Claude Juncker and his Commission aides "enemies of Europe barricaded inside their Brussels bunker", the AFR report added.

Further, the most noteworthy release today will be the publication of the ECB’s account from the September 13 Governing Council meeting, when the reduction in the rate of net asset purchases from the start of October was confirmed and the staff forecasts for GDP growth and core inflation were nudged lower.

The account might just provide further insight into the monetary policy debate, including prospects for possible shifts in reinvestment policy, but the post-meeting press conference was largely uneventful, Daiwa Capital Markets reported.

Meanwhile, the German DAX lost 1.23 percent to 11,568.74 by 09:35GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 36.03 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex