Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news Italian Prime Minister Silvio Berlusconi refused to resign overnight despite a rebellion from within his own government.
Berlusconi is grappling with the spread of the European debt crisis to Italy's bond market, where yields on 10 year Italian government bonds rose over 6.7%, which many view as unsustainable for Italy.
Italy has public debt of over 120% of GDP and even though it is running a primary budget surplus, borrowing costs of over 6% of GDP make such a debt unsustainable. The rise in the Italian bond yield spread over German bund yields to over 450 basis points is seen as crucial, given this was the threshold beyond which Greece, Portugal and Ireland were forced to accept bailouts.
The trouble for Europe is that Italy's 1.8 trillion euro debt is too big to bailout and any crisis in Italy brings the whole Euro zone into question.
Berlusconi's government faces a crucial vote on Wednesday morning New Zealand Time that could trigger a collapse in Berlusconi's rule and the calling of fresh elections.
Meanwhile, France announced a tough new austerity budget overnight aimed at keeping France's AAA credit rating. The changes including an increase in the retirement age and new taxes were described as the toughest measures adopted since World War Two.
Elsewhere, the gold price rose over US$1,787/oz.
The New Zealand dollar was flat.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.