In his address to the Italian Senate this morning, Draghi vowed that his splintered coalition can be rebuilt and played down concerns that he is quitting any time soon. That is enough to provide some relief to Italian bonds as they rallied, causing the spread between 10-year Italy and German bond yields to fall towards 200 bps:
It's a much welcome relief for the ECB ahead of their policy decision tomorrow. The question now will be whether policymakers can convince with their soft announcement of a supposed anti-fragmentation tool.
