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Italian stocks, bonds sell off as Salvini defies EU

By Jeff Davies

While the decline in stocks on main exchanges in Europe benefited the prices of German sovereign debt, the blue-chip index in Milan underperformed other benchmarks and Italian bonds fell substantially, pushing yields higher. The interest rate equivalents returned a chunk of the pullback from yesterday, when investors were led to believe the government in Rome would agree to some concessions after the European Commission announced punitive measures for excessive budget expenditures.

Deputy Prime Minister Matteo Salvini, who leads the Northern League, told RAI that the budget stays and reiterated committed to the program agreed with the Five Star Movement, the senior coalition partner. He acknowledged concerns over yield spreads against German Bunds, but denied responsibility by saying the measure isn’t controlled by the cabinet.

Two-year yields rallied one basis point to 1.47% at 09:06 am GMT, compared to jumps of three points to 3.51% for ten-year maturities and two points to 4.06% in thirty-year bonds. The FTSE MIB index fell 0.88% at 8:52 am GMT, led by Saipem’s 1.93% slump.

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