Italian Sovereign

Giancarlo Giorgetti, undersecretary to the Italian prime minister, has said that he expects the country to suffer an “attack” in the financial markets by the end of the month.

The Italian banking sector could be hurtling towards another crisis this autumn, with the government’s budget negotiations expected to put pressure on the bond market, worsening funding conditions for banks, write Jasper Cox and Bill Thornhill.

Italy’s coalition government is taking investors on a wild ride, with different voices emanating from the populist grouping quickly shifting sentiment among the buy-side. But the juicy spreads the sovereign offers over its peers has helped provide some respite from the sell-offs, said analysts.

Italy’s coalition government is taking investors on a wild ride, with different voices emanating from the populist grouping quickly shifting sentiment among the buy side. But the juicy spreads the sovereign offers over its peers has helped provide some respite from the sell-offs, said analysts.

BTPs sold off on Friday morning ahead of the Italian government’s crucial 2019 budget review, with yields reaching their highest level in two months.

LCH RepoClear has raised its margin on several Italian government debt securities, but the market reaction has so far been muted, according to analysts.

Investors are upbeat about the prospects for Italian government bonds, believing that “market forces” will act as buffers to the effects of exuberant populist government policy. The sovereign had an auction of medium to long term debt this week that was well supported.

Investors are upbeat about the prospects for Italian government bonds, believing that “market forces” will act as buffers to the effects of exuberant populist government policy. The sovereign should be supported at the long end during an auction this week, said some But in the core of the eurozone core, some investors are looking to keep things short.

Italy faced an auction test on Thursday morning and came out with a result that traders said “wasn’t that bad”, despite the political uncertainty facing the country.

In an age where the triumph of populism has shown that communication trumps all else in politics, it’s strange that the Italian iteration of this trend is struggling with something that couldn’t be clearer — its sovereign debt auction schedule.

Italy’s bonds suffered another day of rising yields on Thursday after the country’s government appointed Eurosceptics to head financial committees.

Sovereign debt officials praised the role primary dealers played during the volatility that hit eurozone government debt markets in the second quarter, though some still feel the system is “not ideal”.