Are you afraid of the Italians? Yes. The 10-year government bond interest rate track shows no optimistic signs. Although we are waiting for a slump because of the pace of the first wave of the triple wave structure at the correction phase of the first wave of the triple wave structure, but a few days maybe a week and the decline in the interest rate may end. Then,...
Our negative bias remains in play as prices continue to hold below the recent flip zone.
BTPs bounced the key resistance area and have closed below a recent flip zone on the back of fears that Italy will not comply with EU rules in forming it's next budget, that contains flat-tax proposals and a hefty pension reform. Look for further losses today.
Italy's Deputy PM DiMaio confirms markets' fears: this morning he said that respecting fiscal rules is not the priority in the next budget. Until 94.00 is broken to the upside, pressure still remains. Better picture if we hold here below 93.00 and push towards 90.00 again.
Italian BTPs are under pressure again, after bouncing recent highs. The narrative this time round is a top-level meeting amongst ministers to plan the next budget. The market fears that Italy's populist government will pressure EU fiscal rules...
Very pretty triangle forming in potential B wave suggests attempts for another leg higher in coming weeks to break up to +50bps+ Need confirmation first (staying above tri support) then breakout.
Market participants are watching this move in BTPs today, as Northern League leader Salvini is asking for the resignation of Italy's Finance Minister Tria.
Triangle of minor fourth wave still in play (just completed c possibly). Higher in d then pullback in e to finish wave iv before thrust higher to 3.80% in coming weeks/months to finish wave 3/C before wider consolidation at higher yield levels
Since the recent close above 1.40% the spread widening has accelerated as anticipated. MAY (repeat may) get some pause in the 2.00%-2.12% zone but imo the next logical stopping points are not until those levels marked on the chart....
Looks oversold based on MACD and STOCH indicators
Follow up to posts from around a month/6 weeks ago....Italian 10yr yields headed higher to at least 3.80% imo. Currently in a wave iv triangle (just finished c, need to do d then e) before a thrust higher in yield towards target in coming few weeks/months
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.