From 2010 to 2012, a parade of investors, deeply skeptical about the eurozone’s ability to hold together, wagered that the bonds of debt-plagued countries like Greece, Ireland, Italy and Spain would keep falling. It became a self-fulfilling prophecy as pension funds, mutual funds and banks sold these suddenly risky securities.
The continentwide fire sale was halted only when Mario Draghi, the president of the European Central Bank, put in place an aggressive program to buy the bonds, which made their prices soar and their interest rates fall.
Now, as the E.C.B.’s bond-purchasing program draws to a close, the same strains that prompted the earlier bout of selling — weaker countries running up potentially unsustainable debts — are showing again.
In Italy, for example, the new government is promising an aggressive spending program to spur the country’s stagnant economy. The populists are not deterred by the fiscal restraints imposed on eurozone countries by Brussels.
“These people feel very strongly that deficit limits make no sense,” said Jens Nordvig, the founder of Exante Data, a financial research firm that provides trading ideas to hedge funds.
Many large investors, he said, now “have a short bias” toward Italy, believing that a clash between Rome and Brussels over eurozone rules and regulations could lead to a sell-off. If Italy flouts European deficit restrictions, for example, investors and large banks likely would sell the government’s bonds, fearing deep losses.
Mr. Nordvig said that a robust market for futures contracts tied to Italian government bonds had made it easy to bet against Italy. Futures contracts oblige an investor to buy or sell an asset at a specified date in the future. The popularity of the futures market in Italian bonds means it is simpler and cheaper than before to place speculative bets about coming price swings.