Italian investors cheer report of more positive budget deficit limit

Italian bond yields are sharply lower at the start of the day

2-year BTP yields are down almost 9 bps to 0.77% from Friday's close of 0.86% as Italian investors are cheering on the report from Corriere that the budget deficit will be at 1.6%. This should at least provide some relief for bank stocks and the FTSE MIB in general but it shouldn't take away from the fact that the major theme in markets now is that of the US-China trade rhetoric.

Regional stocks are expected to stay pressured but at least the relief in Italian assets will not help to exacerbate further gains in the swissie on the day.

As for Italy, domestic assets will get good reprieve from further reports of a more positive budget outcome (around 1.5%) but again do remember that this is just a target. If the government still decides to go ahead with their fiscal plans (tax cuts, citizens' income, pension reform) then it'll be an issue that will come up again next year.