ECB’s normalisation could spell trouble for Italy’s bond market
Rome’s budget row with Brussels escalates just as QE is about to halt
The European Commission rejected Italy’s budget for 2019 on October 23, setting the stage for a bigger clash as the southern European country’s sovereign bond yields soar.
At the same time, the European Central Bank plans to halt its asset purchase programme in January 2019, and is about to conduct an update of its capital key, both of which could deepen Italy’s problems.
In an unprecedented measure, the executive branch of the European Union rejected the budget of a member state. Now, the
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