Is Italy "Next"?

Italian Bonds Drop for Third Week

Italian bonds fell for a third week as the nation missed its target at a debt auction and the boost to demand for the securities from European Central Bank liquidity measures waned.

Italy auctioned 8 billion euros ($10.6 billion) of bonds and floating-rate securities on March 29, missing its 8.25 billion-euro maximum target for the sale.

Spain’s bonds rose for the first time in four weeks before it sells debt on April 4. The ECB has lent more than 1 trillion euros to European financial institutions through its longer-term refinancing operations.

The liquidity effect of the LTRO is gradually losing momentum,” said Michael Leister, a fixed-income strategist at DZ Bank AG in Frankfurt. “This explains the increasing effect supply is having on the respective markets; this week Italy, and we’re probably going to see the same thing next week in Spain.”

“The headline on the firewall is a repeating theme that politicians think they come out with a number that will shock and awe the markets, but the market is unlikely to be very impressed,” said Leister. “It will provide sufficient support for bunds, where yields remain biased to the downside.”
 My view:

The bond market looks increasingly fragile in peripheral Europe.

Despite the Trillion Euro bazooka aimed at shocking the market into submission, yields are climbing again.

Eurozone leaders are appearing more desperate as Greece continues to have radical demonstrations which have now spread to Spain, with its much more important Trillion dollar economy.

The Italian economy is twice the size of Spain's and one wonders how long before severe austerity bites the populace enough to cause them to fight back.

Will the summer of 2012 be the "summer of our discontent" for Southern Euro States resulting in a serious market correction?