What to expect in Italian politics in the day ahead
The EU is set to reject Italy's budget in an unprecedented move that will pit the power of a member nation against the European Union.
The showdown over the government's 2.4% deficit-to-GDP target in the budget is outside of EU rules and Brussels plans to reject it with a "negative opinion", according to various reports. That will mean Italy has three weeks to submit a revised budget or face sanctions.
In a letter sent to the EU Monday, Italian finance minister Tria said he wants "constructive" talks with the EU but coalition leaders have shown little willingness to compromise aside from pushing some spending plans a year out.
Italian bonds will tell the story with Italian yields trading just below 3.50%. They've stabilized on hope of something less that a battle royale.
The euro remains in a delicate spot as it tracks towards the October lows after Monday's brief rally was snubbed out. If there's more trouble in Italy in the day ahead, those support levels will break.
