As expected, Fitch downgraded Italy’s rating outlook last Friday, pointing out the risk of fiscal loosening that would make the high level of debt more vulnerable to potential shocks. Both Fitch and Moody’s now have a negative outlook.
Risk-off mood this week has hurt peripheral bonds significantly, pushing Italian spreads to 5-year highs. The ongoing re-pricing of risk in Emerging Markets may continue to fuel some volatility in the periphery.
Moody’s decided to postpone its rating decision to the end of October. The rational was to obtain better visibility on the 2019 budget. The reversal of the pension age or the increase in pension benefits could well trigger a downgrade.
Italienische Top-Politiker fürchten einen Angriff auf italienische Staatsanleihen zum Monatsende hin. Gute Neuigkeiten gibt es dagegen aus Griechenland.
Contrasting with this populist rhetoric, Finance Minister Tria has tried to reassure markets that the EU deficit rules will be respected.
Some Lega officials renewed their anti-euro rhetoric this week, calling for an euro exit. This does not bode well for a quiet summer.
The percentage of Eurosceptic voters is clearly declining in Italy. But on Tuesday, EU affairs minister Savona stated loud and clear that Italy should be prepared to any eventuality including the exit of the euro.
Nachdem nun ein ernsthafter Handelskrieg begonnen hat, werden Einfuhrzölle China stärker treffen als die USA, warnt der Chefvolkswirt von Robeco, Léon Cornelissen.
The first piece of legislation by the new government reverses some of the labour market flexibility introduced in recent years.
The Italian government has seen signs of continuity with the previous government over the past week and signs of diverging interests among the two populist parties.