Italy's government bonds have shrugged off the risks from the nation's general election already even though it could be weeks or months before it becomes clear what the next government will look like. There are plenty of voices out there saying fixed-income investors are being too optimistic.
"Financial markets may at this stage be under-estimating the implications of the populist surge", says ABN Amro. "Italy looks set for a prolonged period of political uncertainty." That's in line with the view from Italian bank UniCredit.
And BlackRock is also cautions on the bonds in particular. "We see scope for pressure on Italian and peripheral euro-zone government bonds but don't see this as a sustained negative for the euro or regional equities." writes Richard Tumill, BlackRock's Global chief investment strategist. It may be that the immediate recovery in the debt market will gradually unwind.
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov
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