Italian government bonds came under pressure, pushing yields higher, after Italian deputy prime minister Luigi di Maio, who is also the head of the 5-Star Movement, threatened to leave and dismantle the coalition government if he could not deliver on his spending plans. The 10-year Italian government bond yield TMBMKIT-10Y, +0.77% climbed to 2.890%, from an intraday low of 2.803%, according to Tradeweb data. The selloff pushed investors into risk-free government paper. The yield for the German 10-year bond TMBMKDE-10Y, -3.57% fell 1 basis points to 0.478%, along with the 10-year Treasury yield TMUBMUSD10Y, +0.24% , which was down 1.5 basis points to 3.068%. Bond prices move in the opposite direction of yields. European bond investors have scrutinized the deficit projections for the upcoming 2019 budget, amid concerns the antiestablishment Italian government may loosen the fiscal taps and risk a clash between Rome and Brussels.
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