Europe

Submitted by Michale Shedlock via MishTalk.com,

The eurozone cannot survive without Italy. The serious problem at the moment is the Eurozone also cannot survive with Italy.

Two of Italy’s three largest parties are anti-Euro. The only party in Italy that does support the euro is ex-prime minister Matteo Renzi’s Democratic Party. And with Renzi gone, there’s a huge risk the party splinters.

The key economic releases this week are retail sales on Wednesday and CPI on Thursday. The key market-moving event will be the December FOMC statement released on Wednesday at 2PM. In addition, there is one scheduled speaking engagement by Richmond Fed President Lacker on Friday.

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A euro crisis and contagion is almost certain in 2017, Irish economist and writer David McWilliams has warned:

"It is almost certain that there will be another euro crisis in 2017. The last time we had a euro crisis, the focus of attention was Greece; today the vortex is Italy.

The global bond rout returned with a bang, sending 10Y US Treasury yields as much as six basis points higher to 2.53%, the highest level in over two years. The selloff happened as oil prices surged by more than 5% following Saturday's agreement by NOPEC nations agreed to slash production, leading to rising inflation pressures. At last check, the 10Y was trading at 2.505%, up from 2.462% at Friday and on track for its highest close since September 2014, according to Tradeweb.