The Italian Budget That has Bond Markets on Edge

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August may yet prove a sleepy month for the Italian bond market, but the last week has been a reminder not to take a summer lull for granted, the Financial Times reported. A renewed sell-off gripped the €2tn market late last week as the country’s populist Eurosceptic coalition government began negotiations on its debut budget, something the market had not expected until the autumn. That has left investors sharply focused on the economic and fiscal outlook for the eurozone’s third-largest economy, as well as the potential for a stand-off with Brussels if the government, made up of the League and Five Star parties, is aggressive in its spending plans. Here are some of the key events which could prove to be flashpoints for the eurozone’s biggest sovereign bond market, where its €2tn of outstanding debt amounts to 132 per cent of the country’s GDP. Read more. (Subscription required.)