German-Italian yield spread widens further today after EU finally confronted Italy on its budget. A letter was passed to Italian Economy Minister Givoanni Tria, detailing why the budget is an “obvious significant deviation” of the recommendations adopted by the European Council under the 2019 Stability and Growth Pact. Italy will now have until October 22 to respond to the letter. But it’s unlikely for the populist coalition to back down.
At the time of writing, Italian 10 year yield is up 0.075 at 3.753.
On the other hand, German 10 year yield is down -0.016 at 0.405. That is, German-Italian yield spread is now at 334!.
Euro is just mixed for today, even though it’s the second weakest for the week after Sterling.
