Italian bonds cheer S&P's decision to maintain nation's credit rating

Will this be a repeat of what we saw last Monday?

Italy's 10-year bond yields have fallen to a one-week low after S&P decided to leave Italy's credit rating unchanged, although lowering the outlook to 'negative'. If you recall last week, Moody's decision to downgrade Italy but change the outlook to 'stable' also brought about early gains for Italian bonds but they eventually gave back all those gains by the end of European trading.

Will we see a similar case this time around?

The early reaction here will provide some relief for the euro and bank stocks but fundamentally, Italy's debt issues aren't going away any time soon. The only thing that changes now is that the risks of credit rating agencies are out of the way and that should provide some near-term comfort. But don't expect it to change the underlying factors that has been weighing on Italian assets and the euro in the big picture.