It was all going well when Draghi started speaking. Yes the ECB is "working" on a bond buying program. Until this comment came out:
But we know the "shorter part of the curve" isn't the problem. Both Italy and Spain have the ability to roll short-term paper. The issue for these nations is being shut out of the long-term markets and having to constantly auction bills, risking market disruptions. We all know what happens when firms rely on short-term funding when markets lose confidence (Lehman).
Needless to say, markets reversed the initial euphoria, as Italian 10y bonds swung 3% and the euro went into the red on the day.
|Italy 10y bond price intraday (source: Bloomberg)|