Italian Yields Spike On Report Italy Ruling Coalition Seeks Funds To Quit Euro

We noted that Italian yields had started to fade wider earlier, but 2Y BTPs are now 50bps higher than the open after headlines that EU lawmakers from the two parties forming Italy’s new government coalition voted this week to set up EU funds to help countries quit the euro.


Reuters reports that the vote came as the anti-establishment 5-Star Movement and far-right League were finalizing a deal to form an executive in Rome, under pledges that leaving the euro was not in their government program.

Despite the declared intentions to stay in the euro, Cyprus Mail details that all six EU lawmakers from the League and all but one of the 14 5-Star Members of the European Parliament voted on Wednesday for a document that called for the establishment of programmes of financial support “for member states that plan to negotiate their exit from the euro.”

The document voted on by their EU lawmakers called for compensation for “the social and economic damages caused by the euro zone membership.”

The document was an amendment to a European Parliament resolution on the EU budget for the 2021-2027 period. The proposal was backed by 90 lawmakers, but was rejected by a majority of the 750 MEPs.

As we noted earlier, this should come as no surprise since, as we explained, the new coalition government is more anti-establishment than the one Mattarella rejected...

And the BTPs that Italy's FinMin bought yesterday are losing ground fast...