Italian 10-year yields test support

Italian 10-year yields down 17 basis points

On Friday, S&P maintained its BBB rating of Italy and the government is showing some signs of flexibility. A government source cited by Reuters said that if funds allocated for pension reform and citizen's income are not fully used, they will go towards deficit reduction.

Italian 10-year benchmark yields are down 17 basis points to 3.277% today, which nearly matches the October 8 low. That's an are to watch as the month winds down.

So far the improvement in Italian borrowing costs isn't helping the euro but a further fall -- especially if broad markets calm down -- would lend a tailwind to the euro.