Bad news for Renzi yet good for Italian risk premium

Italy Generic Govt 10Y Yield

Mr Renzi’s centre-left Democratic Party  lost the northwestern region of Liguria and populist parties such as the anti-euro, anti-immigrant Northern League obtained a non-negligible support.

“Will [results] weaken the Renzi government’s ability to push through hard-won reforms?,” Reuters’ Mike Peacock wondered.

Italy’s manufacturing PMI climbs to highest for over four years in May, according to the Markit report released on Monday. Higher output among manufacturers reflected a rise in new orders, the fourth in as many months. As in the case of output, the latest increase in new work was the sharpest since early 2011. Firms commented on a recovery in demand and also mentioned higher new orders from abroad. Indeed, new export business expanded in May at the fastest rate for almost a year.

“Italy’s manufacturing sector is enjoying its best quarter of expansion since 2011. Output growth has accelerated in every month this year so far, and a further strong increase in new orders suggests production is set to remain on an upward trend throughout the summer,” Phil Smith, Economist at Markit said.

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