September 20, 2018 / 2:11 PM / 3 months ago

Italy 2-yr bond yield jumps on di Maio threat to end coalition

LONDON, Sept 20 (Reuters) - Short-dated Italian bond yields jumped on Thursday, with analysts attributing the moves to a threat from the 5-Star Movement’s Luigi di Maio to quit the coalition if the party’s spending demands in the 2019 budget are not met.

“If we do not find the resources we better go home. It is useless to chug along,” di Maio told Italy’s Radio 24.

Italy’s two-year bond yield jumped to around 0.82 percent , a session high, before pulling back to around 0.79 percent — still up some 5 basis points on the day.

“They haven’t threatened to cause the government to collapse before, so this is new,” said Richard McGuire, head of rates at Rabobank in London.

“Previously there was some horse trading going on and (Economy Minister Giovanni) Tria was maintaining some control, but it appears that 5-Star are willing to sacrifice the government rather than cede ground.”

Reporting by Dhara Ranasinghe and Giselda Vagnoni, Editing by Sujata Rao

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