Something has to give. Markets in general seem to be off with the fairies; ignoring the EZ mess that is unraveling in a very public fashion.
Italy's 10y bonds crashed through 7% last night and with 300 billion euros to find next year for maturing bonds plus the 25 billion euro needed to finance it's '12-'13 budget deficit markets are taking a wide berth of anything marketed under "Italian bond market".
The contagion is spreading into the French bond market where the gap between German and French bonds has opened from ~.5% a year ago to near ~1.5% now.
There's talk around the EZ that Germany may split and form it's own union. That then leaves the BIGPIS with sorting through their own funding worries. It's either that or Germany puts up the money for bailouts, increases it's gamble in the EFSF or allows the ECB to become energetic in it's buying of Italian bonds (accept QE).
The choices are becoming starker and more real every day.
When markets finally wake from their afternoon snooze it will be a horror movie with a grizzly, bloody ending.
