Economists and Strategists at Nomura write....>

ITALY: Economists and Strategists at Nomura write that they expect a hung

Parliament after the Italian election followed by several weeks of negotiations

but see a Centre-Left/Centre-Right coalition. This implies "fiscal policy will

probably be loosened as all these parties are proposing tax cuts and higher

government spending".

- Nomura ascribe a 70% chance of a Hung Parliament after the election. Within

that scenario, they see a 50% chance of a Centre-Left/Centre-Right Coalition, a

30% chance of new elections, 15% chance of a wider grand coalition and a 5%

chance that the League/5SM form a government.

- If there is no Hung Parliament (30% chance), then Nomura sees it as highly

likely (90%) that the Centre-Right will form a government.

- For EGB's, the important point is that the "anti-EU referenda are off the

table no matter who wins this election"

- For Italian BTPs Nomura write "we look for an opportunity to enter a

compression trade should the widening move expand further. We maintain our short

SPGB versus DBR and BTP via a 1:2:1 credit barbell."