Prospect of new elections puts pressure on GER30
|GER30, H1
Prospect of new elections puts pressure on Italian assets. Economist Cottarelli, who has been tasked with trying to get backing for a temporary government until fresh elections either in autumn or early 2019, may have met with approval from abroad and may be the country’s best shot at trying to stabilise markets, but is facing opposition from the two populist parties. Five Star Movement and La Lega, whose bid to form a coalition failed over the weekend have been attacking President Mattarella for refusing to sign off a government that included a Eurosceptic finance minister and already said they won’t back Cottarelli, a former director if fiscal affairs at the IMF.
The political turmoil continues then and Italian assets are broadly selling off now, although the Italian 10-year yields are up 21.9 bp at 2.657%, the 2-year gained 47.0 bp and is at 0.910%. The German benchmark (GER30) is down -0.10% so far today, reaching earlier close to May’s low at 12,818.50. This could provide some support to the index, and a swing back higher at the confluence of 38.2% Fibonacci retracement level and the 50-period EMA.
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