Italian debt rallies despite poor auction results ahead of speech by Conte
Italian bonds rallied on Thursday despite a very weak showing at an auction for government debt and despite mixed remarks from top politicians in Rome regarding the scope for any flexibility in talks with Brussels over the country's budget for next year.
The Italian Treasury received a total of €2.16bn in orders for five-year inflation-linked government notes on offer with a real coupon of 1.45%.
That was a far cry from the €8.0bn which analysts had anticipated.
The sale of the notes was carried out in two tranches, one for retail investors between 19-21 November and another for institutional investors on Thursday.
At €1.3bn, the order book for the latter was the smallest amount for a government debt sale since 2012.
Yet following the sale, as of 1516 GMT the yield on the benchmark 10-year Italian government note was off by four basis points to 3.43%, having earlier hit an intraday high at 3.54%.
Helping to buoy sentiment, Italian deputy Prime Minister, Luigi di Maio, reportedly said he saw room for dialogue with the European Union on his country's budget plans.
Be that as it may, in remarks to state broadcaster RAI, his counterpart, Matteo Salvini, said Rome would not change direction, saying that "we don't take steps backwards" ANSA reported.
Italian Prime Minister, Giuseppe Conte, was scheduled to address the lower chamber of parliament At 1600 GMT on the dispute with Brussels.
Commenting on the recent performance of Italian debt markets, earlier analysts at Rabobank had said: "Despite these negative developments, Italian bonds actually heavily rallied on the day based on a series of headlines suggesting that the two Italian deputy PMs would be willing to negotiate with the EC.
"However, as we have become used to with Italian politics in recent months, this willingness has subsequently been denied via various media outlets and Italian bonds have opened wider this morning."