Investors are ditching whatever hopes they once had for a conclusive solution to the debt crisis after another week of confusion and turmoil in Europe.
Doubts rose about whether Greece would back 130 billion-euro bailout just weeks after it seemed leaders had drafted a master plan to solve the crisis.
Disaster may have been averted when Greece, under fierce EU pressure, agreed over the weekend to form a new government that would approve the deal and stave off bankruptcy.
But that did little to calm investors, who were already looking ahead to the next problem: Italy. Italian bond yields hit a euro-era high of 6.4 percent Friday, raising fears the country may soon need a Greece-style emergency bailout.
The Greek agreement “may spark a brief relief rally,” said Alan Ruskin, head of global G10 currency strategy at Deutsche Bank. “But it won’t last and we will soon go back to focusing on Italy.”
“At the end of the day, it does seem like a grand plan is elusive at best,” said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.