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Italy downgraded to Baa3 from Baa2 by Moody’s, given a stable outlook
Moody’s said that most of the planned increase in government spending in the budget is structural. They said the new government’s plans “do not comprise a coherent agenda of reforms.”
S&P is scheduled to grade Italy next Friday (Oct 26). Their rating is currently BBB with a stable outlook.
Italy’s Deputy Prime Minister Di Maio:
– If European commission should reject Italians letter, there is still weeks to discuss budget with them
-100 basis points of increase in Italian bond spreads to Germany is due to fear Italy could leave the euro. That is not the caseItaly’s EU minister Savona says
If the Italy and Germany bond yields rises and nobody intervenes, then banks can be put in a difficult situation.
ECB should indicate solutions to problems in banking system and potentially intervene if there is a crisisItaly’s Tria “Signaled to Eurozone ministers he was working for compromise on budget” – Reuters
EURUSD traded up on the headlines to new highs of 1.1422 from 1.1360 areaGerman Financial Minister Scholz :
Expects Italian Gov’t will take the necessary decisions
Says not demanding austerity for Italy, but caution
Quite optimistic there will be a good solution on Italy budget
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