The next step in the global populism trend could be felt December 4. This is when the Italian referendum to change the constitution, a measure supported by the political establishment, will be voted up or down. A Moody’s report notes that rejecting the referendum could “contribute to global financial market uncertainty, and greatly add to the concerns surrounding the restructuring of the Italian banking sector.” A Deutsche Bank report, however, only handicaps a 40% chance of the vote succeeding. To various degrees, bond markets are already moving in anticipation of a rejection of the measure, but the real concern is a populist victory leading to rejection of the European Union in 2018.
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