Germany bond yield gap tightest in 9 months after Italy cuts deficit target

LONDON: The gap between Italian and German benchmark bond yields narrowed to its tightest level in over nine months on Tuesday after Rome cut its 2019 budget deficit target overnight in an effort to avoid EU disciplinary action.

The closely-watched Italy/Germany 10-year government bond yield spread tightened to 229 basis points in early European trade, a level last seen in September 2018 when tensions over the 2019 budget first surfaced.

Italian 10-year government bond yields were at 1.938% on Tuesday morning, close to a one-year low hit in the previous session.