Italian BTPs have rallied strongly on...>

EGB SUMMARY: Italian BTPs have rallied strongly on positive fiscal news early

Wednesday though are off their highs, while Bunds have weakened.

- BTPs rallied after Corriere della Sera reported that the government would cede

to EU pressure by bringing the deficit from 2.4% of GDP in 2019 to 2.2% in 2020

and 2.0% in 2021. BBG cited La Stampa reporting President Mattarella would

refuse to sign a budget containing a 2.4% deficit over 3 years. The budget is

expected to be presented to parliament Wednesday.

- The Dec 18 BTP future is up 83 ticks at 121.85, off highs, having traded in a

range of 121.58-122.43 today. The curve is bull flattening, with the 2-Yr yield

down 22.8bps at 1.257%, 10-Yr down 12bps at 3.332%.

- The Dec 18 Bund future is down 24 ticks at 159.28. 2-Yr German yield is up

1.6bps at -0.546%, 5-Yr up 2.2bps at -0.12%, and 10-Yr up 2.3bps at 0.445%.

- Longer-dated Blue Euribor futures are off 2 ticks, mirroring the German curve.

- Spanish services PMI for Sep game in at a 5-year low at 52.5. Italy is next at

0745GMT while France follows this up at 0750GMT. At 0755GMT is Germany, while

the Euro Area PMI at 0800GMT.