Tuesday’s announcement that Italian PM Berlusconi promised to resign coincided with a rally in U.S. markets. Was it the cause? Maybe.
This morning things are looking a bit less sanguine as the bond vigilantes have appeared, and Italian yields spiked. The U.S. dollar index moved to its highest level since February and, as of this writing, we are looking at a >2% down day in equities.
The markets just can’t shake off these news-driven whipsaws. Caution is the watchword here.