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Citi Look To Fade Any Narrowing Vs. Bunds Given Fiscal Headwinds & Positioning

BTP

Citi write “yesterday’s widening took the 10yr BTP-Bund spread to our model fair value, but it might struggle to reverse if Italy revises the cash deficit target for 2023 higher in the DEF, which would imply larger funding needs and a higher debt/GDP ratio.”

  • “While BTP Valore supply next week is perhaps a near-term relief, we would fade any spread tightening given consensus on growth/deficit still looks optimistic vs. our economists’ forecasts, and real money /bank positioning still feels long.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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