Italian government bonds rally after signs of progress on coalition talks

Prices for Italian government bonds surged, pushing yields lower, after signs that coalition talks between the anti-establishment 5-Star Movement and the center-left Democratic Party were making headway, soothing fears of a potential snap election. The 10-year Italian government bond yield

TMBMKIT-10Y, -14.38%

tumbled 17.6 basis points to 1.143%, Tradeweb data show. The all-important spread between the benchmark Italian bond and the comparable German maturity narrowed by 16 basis points to 1.83 percentage points. A narrower yield premium can indicate that investors see less geopolitical uncertainty on the horizon from Italy. Democratic Party Senate leader Andrea Marcucci said talks between the 5-Star and the center-left party had made progress. Tensions between the 5-Star Movement and the ascendant far-right League party had threatened to unleash political uncertainty into Italy. Analysts say Matteo Salvini, leader of the League party, was hoping to trigger a snap election, but Italian president Sergio Mattarella gave 5-Star the chance to form a new coalition.

Go to Source