LONDON, May 31 (Reuters) - Italian short-dated bond yields surged on Friday with two-year yields on track for the biggest-one day rise in two months after the Bank of Italy warned that public debt could rise more than forecast in 2019.
A vow by U.S. President Donald Trump to impose tariffs on Mexico hurt risk sentiment globally, exacerbating the selloff in Italian bonds.
Italy’s 2-year government bond yield jumped 16.5 basis points to 0.813%, its highest level in two weeks. Italy’s 10-year spread over Germany also hit its widest point since December at 293 basis points.
The Bank of Italy warned on Friday that public debt could rise more than forecast by the government in relation to domestic output this year, and called for measures to cut Rome’s 2.3 trillion euro ($2.6 trillion) debt pile. (Reporting by Virginia Furness; Editing by Dhara Ranasinghe)