Italian government debt holds its ground, Brussels awaiting data from Rome
Italian government bonds are holding their ground as markets wait for the details of Rome's budget plans, despite the strong headwinds blowing across the Atlantic and the skepticism voiced by some observers.
Overnight, and in what many observers saw as a small concession to Brussels, the country's Prime Minister, Giuseppe Conte, said Italy would commit to lowering its public deficit-to-gross domestic product target for 2019 from 2.4% to 2.1% in 2020 and 1.8% for 2021.
That, he said, would suffice to lower the stock of public debt as a proportion of GDP from 130.9% at present to 126.5%.
Conte was speaking following a Cabinet meeting to discuss Italy's budget plans and following the concerns that had been voiced by European Union officials thus far.
Previously, the coalition League/5 Star Movement (5MS) government had said it intended to run a deficit of 2.4% out to 2021.
Conte's remarks saw longer-term Italian government bonds bounce back on Wednesday evening, even as US Treasury prices fall back following the release of solid US ADP employment data for September, a strong reading on the services sector and hawkish comments from Federal Reserve chairman Jerome Powell.
In response, the yield on the 10-year Treasury note hit its highest level since July 2011 on Wednesday and the yield on the 30-year Treasury bond hit its highest level since October 2014
But some observers were left unimpressed nevertheless.
In remarks to daily Il Messagero, the president of the European Parliament, Antonio Tajani, said Rome would end up overshooting its deficit target of 2.4%, dubbing projections for economic growth next year of 1.6% as "just propaganda".
Possibly in response to those remarks, in an interview with state radio RAI, Italian deputy Prime Minister, Matteo Salvini, said the government in Rome would not change its target for the country's public deficit next year even if the country's so-called 'risk premium' - or the gap between yields on Italian and German 10-year debt- widened to 400 basis points.
As of 1553 BST, the yield on the benchmark 10-year Italian government note was four basis points higher to 3.35% and the spread versus similarly-dated German bunds at 282 points.
Separately, citing European Union sources, ANSA reported that the European Commission was waiting for Rome to provide it with its projections for the nominal and structural public deficits before making any judgements and that it would only assess the figures for 2019.