Italian Bonds Fall, Stocks Rise as Meloni Bloc Wins Majority in Elections

By Geoffrey Smith

Investing.com -- Italian BTPs led Eurozone bonds lower on Monday, after the victory of a right-wing bloc led by Giorgia Meloni secured a majority in Italy's parliamentary elections.

The election leaves Meloni's Brothers of Italy party as the largest in both the Senate and the Chamber of Deputies. As such, the next Italian government is likely to be a led by a party that has expressed sympathies in the past with the Fascist policies of former dictator Benito Mussolini.

Meloni had tempered her rhetoric during the election campaign and indicated that she will press ahead with economic policies required by the European Union to unlock tens of billions of euros in post-pandemic aid that will be necessary to rebuild the country's economy.

The yield on the benchmark Italian 10-year bond rose 12 basis points to 4.48% at the open, while the 2-year note yield - a more direct reflection of looming stress in Eurozone debt markets - rose only 10 basis points to 3.13%.

While the move was a sharp one, it came on a morning of general alarm in worldwide bond markets at the prospect of European policy cracking under the pressure of the ongoing energy crisis. The German 10-Year yield also rose by 7 basis points to 2.10%, while the 2-year note yield rose 5 basis points to 1.96%.

Italian stocks, by contrast, welcomed the result, which promises a broadly pro-business agenda from the next government. The FTSE MIB index opened up 0.2%, making it the second-best performing index in Europe.

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