[Italy soccer fan] * PRESIDENT SERGIO MATTARELLA REJECTED EUROSKEPTIC ECONOMIST AND FORMER BANKER PAOLO SAVONA FOR FINANCE MINISTER. * ITALIAN BOND YIELDS ARE SURGING AMID THE POLITICAL UNCERTAINTY. * CITI SAYS YIELDS COULD GO A LOT HIGHER FROM HERE. ------------------------- Italian yields are surging Tuesday morning amid growing political turmoil in Italy after President Sergio Mattarella rejected euroskeptic economist and former banker Paolo Savona for finance minister. Now Mattarella must form a new government or call for another election. "His chances of succeeding are slim and elections are likely in September," Kit Juckes, a strategist at Societe Generale wrote on Tuesday morning. "Which leaves us 3-4 months of uncertainty ahead of a vote that may be seen as a referendum on Euro-membership." The worries have sent Italian yields sharply higher, with the 2-year soaring more than 150 basis points at its highs. Elsewhere along the curve, the benchmark 10-year yield is up more than 40 bps at 3.08%, and according to the Citi Fx Technicals team led by Tom Fitzpatrick things are likely just getting started. In a note sent out to clients on Friday, Fitzpatrick's team suggested that a weekly close above the 2.72%-2.74% level would "complete a clear double bottom with a target as high as 4.40-4.45%." And while it's only Tuesday, yields look like they are well on their way to close above that key level. [Italy 10Y] That's likely bad news for the rest of the European periphery, which is seeing their borrowing costs surge alongside Italy's. Greece is seeing the biggest impact, with its 10-year yield up 47 bps at 4.81%. Meanwhile, Spain and Portugal's 10-year yields are higher by 7 and 12 bps respectively. SEE ALSO: EVERYTHING YOU NEED TO KNOW ABOUT THE ITALIAN POLITICAL CRISIS — WHICH IS 9 YEARS IN THE MAKING AND COULD BRING ABOUT THE DEMISE OF THE EUROZONE Join the conversation about this story » NOW WATCH: This $530 Android phone is half the price of an iPhone X and just as good
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