Spread BTP-BUND 10Y
Short

EUR/USD…the main roadblock to a hawkish ECB policy may be Italy

The BTP/Bund spread is likely to be a key roadblock to the ECB pivoting too hawkish. Italy’s fiscal health remains the Achilles Heel of EU stability. Recent EUR strength is understandable given LaGarde’s hawkish presser, but BTP vulnerability ought to be a mitigating factor.

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