Italy will auction up to 6 billion euros of five- and 10-year bonds after two earlier sales this week saw two-year and six-month yields drop to the lowest level in six months. Don’t be lulled into thinking all is well.
After Silvio Berlusconi’s failure to pull down the government, Prime Minister Enrico Letta has some time to push through economic reforms, cut taxes and spending. But already the politics look difficult and the central bank said yesterday that government forecasts for 1.1 percent growth next year and falling borrowing costs were overly optimistic.
Bank of Italy Governor Ignazio Visco and Economy Minister Fabrizio Saccomanni will speak during the day.
Italy’s three main unions are to strike over the government’s 2014 budget plan, which itself is only a modest first step to putting the economy back on track. Former premier Mario Monti resigned as head of his centrist party after it supported the budget which he viewed as too timid, and the centre-right PDL, which makes up a fractious coalition government with Letta’s centre-left, is objecting for different reasons.
There’s a lot of data to wade through with Spanish third quarter GDP, just out, confirming that fragile 0.1 percent growth has put an end to nine successive quarters of contraction. So far any signs of recovery have been rooted in increasingly competitive exports but yesterday Spanish retail sales rose for the first time since June 2010.