Italian politicians are attempting to calm the markets. Today this seems to be working, and driving risk-on. Eyes on the key levels.
After another negative close, stops can be trailed to 93.00 looking for 90.00 as a first target. Keep an eye on the Italian political agenda and on risk aversion which seems to be creeping in.
Yesterday we expected the Italian 10yr to break back through recent supports, after Conte's initial proposals on immigration, taxes, welfare seem to imply a decisive clash with Brussels. These measures would be good for the population, but EU will not allow them. Further downside is expected and 90.00 is the first target.
The Italian Government has started it's fight against Brussels. BTPs are responding and we may see further downside today.
Conte's League/MS5 Government would win a vote of confidence today. A clash with Brussels is only a matter of time. Markets a little nervous. A breach of key supports would open up the downside again.
According to reports in Italian media, parties across the political spectrum are trying to reach a deal to avoid snap elections. This has calmed markets for the time being, but price action is telling us this is just temporary.
Big moves and volatility expansion in Italian BTPs on the recent political turmoil. Bias remains down in the short term AND in the longer term.
Short 10 Year Italian BTP Futures as a hedge and catch up play with U.S. treasury and German Bund Yields.
210 415 - Reversal Curve Rates Italy - Sales of long-term - Shopping on short - Contagion Grexit - This has led to the tracing on FTSEMIB