Use This Chart To Decide If You Should Start Panicking About Italy Again

Could the Italian elections precipitate a return to the intense days of the European sovereign debt crisis?

Morgan Stanley -- which places 30% odds on a new election -- offers this nice chart which serves as a potential guide to danger.

This shows the "OMT Range" on Italian sovereign debt in the red horizontal lines. In other words, ever since the European Central Bank announced its plan to backstop government debt, Italian borrowing costs have been in the range enveloped by those lines.

Only if Italian borrowing costs (or costs relative to German borrowing costs) shoot above the top red line should you be worried that the imputed backstop is starting to weaken.