>> Italy could hold new elections as early as July, and a bit to tackle the country's spiraling political turmoil. That's according to sources close to some of Italy's main parties. It comes on a day of carnage for financial markets in the Euro zones biggest economy that reverberated across the world.
Italy has been searching for a new government since an inconclusive poll in March. From which the anti-establishment five star movement, and the far right league emerged the biggest winners. Their pick for economy minister, who would argue that Italy should be prepared to leave the Euro, was blocked by Italian president Sergio Mattarella on Sunday.
In response, they abandoned plans to form a government and switched back into election mode. Mattarella appointed a former IMF official as interim prime minister on Monday. But sources now say there is a chance he'll dissolve parliament in the coming days, and sent Italians back to the voting booths on July 29th.
But it's the prospects of just such an election re-run that led to markets tumbling on Tuesday. But investors fearing the poll could become a proxy referendum on Italy's Euro membership. Reuter's Jamie McGeever explains.>> Investors have been running for the hills. They've been running towards the safe haven, safety and security of top rated government bonds, so US treasuries, UK gilts, and German boons.
They've seen their yields plummets like a stone and the price of those bonds go up in value. The opposite has been happening with Italian bonds. They've had a dramatic day on the market and for all the wrong reasons. The price of those bonds has plummeted and the yields have soared.
For example, the two year yield, the yield on two year Italian bonds, has had its biggest one day rise in quarter of a century. So completely blitzing anything that happened in 2008, 2009 and even the Euro debt crisis in 2011-2012.>> US stock markets sank more than 1% on Tuesday with the S&P 500 and Dow Jones Industrial average on track for their biggest one day drop in a month.