There has been a big rally in European sovereign debt markets as borrowing costs for countries like Greece, Spain, Portugal, and Italy have come way down.
In Italy’s case, the spread between its 10-year borrowing costs and Germany’s 10-year borrowing costs (a crucial benchmark) fell below 300 basis points today.
Below is a 5-year chart…
Photo: Bloomberg, Business Insider
However, according to Mario Monti – Italy’s technocratic prime minister – it’s not quite enough.
Monti said, according to Bloomberg, that he would like the spread to get to 287 basis points.
And that’s great, but wow – that is awfully specific. We have never heard of a head of state making such a specific goal before. But Monti is a former ECBer and adviser to Goldman Sachs. He’s not a politician, and he knows finance.
By making such a specific spread goal, he’s really redefining the word “technocrat.”