September 25, 2018 / 6:52 AM / 3 months ago

Italy bond yields fall, coalition seen willing to keep deficit below 2 pct

LONDON, Sept 25 (Reuters) - The yield premium investors demand for holding Italian government bonds over top-rated German debt fell on Tuesday, on signs that Italy’s coalition is likely to reach a compromise over the 2019 budget.

Italy’s ruling coalition is willing to keep the budget deficit below two percent of gross domestic product (GDP), a government source told Reuters after a meeting at the prime minister’s office over the budget late on Monday.

Analysts also noted a report by Italy’s La Stampa that the Italian government will unveil a 2019 deficit plan of 1.9 percent of GDP this week, including a 36 billion euros investment package.

Italy’s 10-year bond yield fell 5 basis points in early trade to 2.90 percent, squeezing the gap over benchmark German Bund yields to around 235 bps, from around 245 bps late on Monday. (Reporting by Dhara Ranasinghe Editing by Tommy Wilkes)

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