Just as European markets were closing for the day with the Italian 2Y yield ominously back above 2% and the EURUSD trading in a tight range around 1.6130, a Reuters headline spiked the EUR and sent Italian yields quickly lower, when the newswire reported that in an attempt at compromise, the 5-Star party, the League coalition partner, called on the controversial euroskeptic candidate to head the economy ministry, Paolo Savona, to withdraw his candidacy to a government could be formed.
- ITALY’S 5-STAR CALLS FOR SAVONA TO WITHDRAW CANDIDACY FOR ECONOMY MINISTRY TO ALLOW GOVT TO BE FORMED
As a reminder, it was Savona’s candidacy that president Mattarella vetoed over the weekend, launching the latest bout of Italian political crisis.
And while it was unclear if League leader Salvini would balk at the proposal, or continue insisting that Savona be the country’s next economy minister, the latest confirmation that a rift is forming between the Lega and the 5-Star was enough to send Italy’s 2Y yield 23 bps lower…
… while the EURUSD spiked to session highs, just shy of 1.1680 and nearly 140 pips higher on the day.
We now wait for an additional comment from either Salvini or Savona, and until then here is the latest soundbite from the League leader:
- ITALY’S SALVINI SAYS IN ROME `IT’S COMPLETE CHAOS’: ANSA
Salvini added that he hopes a government can be formed with the center-right or with the Five Star Movement “but my patience is near the limit,” he said in remarks at an event near Genoa cited by newswire Ansa.
So was Oettinger right all along, and is Italy about to fold to the whims of the market? Find out shortly.
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