Two-year Italian bonds fall before supply, summit

LONDON: Two-year Italian government bonds came under pressure on Tuesday as the market readied to absorb a bout of supply this week and as skepticism set in before the European Union summit on Thursday.

The Italian Treasury will offer up to 3 billion euros of zero coupon bonds and up to 1 billion euros of bonds linked to euro zone inflation later in the day. That will be followed by up to 5.5 billion euros of fixed-rate bonds on Thursday. .

Two-year government bond yields rose 10 basis points to 4.47 percent, while the cost of insuring five-year Italian debt jumped 17 bps to 540 bps, according to Markit data.

Gavan Nolan, analyst at Markit, said the CDS move was due to "negative sentiment ahead of the summit on Thursday."