Italian bond investors aren't cheering the news of a 2.4% budget deficit target
2-year yields are up by 13 bps while 5-year yields have jumped up by 20 bps to start the day. This is surely going to weigh on Italian bank stocks later in the day and it highlights the sentiment associated with a higher budget deficit target.
This has also seen the spread between Germany and Italy's 10-year bond yields rise to a three-week high of 257 bps:
The euro has already been dragged lower since yesterday on the back of Italy's budget worries and right now, the technical picture in EUR/USD is starting to favour a downside move as the upside bias fades.
