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Italian Bonds Surge After Salvini Strikes More Conciliatory Tone

Italian Bonds Surge After Salvini Strikes More Concilatory Tone

(Bloomberg) -- Italy’s bonds surged after Deputy Prime Minister Matteo Salvini said that he would be willing to talk to French and German leaders to try to secure a higher deficit ceiling.

The more conciliatory comments prompted a rally in Italian bond futures, which was exacerbated as traders raced to cover short positions, according to London-based traders. Salvini is hoping to secure a large increase in seats in European Union elections this week, which could give him more policy leverage in Rome and Brussels.

Italian Bonds Surge After Salvini Strikes More Conciliatory Tone

Ten-year yields fell as much as nine basis points to 2.55%, the lowest level in over two weeks. Those on two-year bonds dropped 10 basis points to 0.47%. The potential for another battle with the EU over the budget deficit has weighed on the debt in recent weeks, with Salvini saying a flat tax will be a priority if his League party wins the European elections.

To contact the reporter on this story: John Ainger in London at jainger@bloomberg.net

To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Neil Chatterjee, Scott Hamilton

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