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Italian Bonds Brace For What Could be the Next Big European Risk

Uncertainty from Italy referendum could drive bonds down

Italy’s constitutional referendum, seen as among this year’s biggest political risks in Europe, is increasingly on investors’ radars as it threatens to drive selling pressure on the nation’s government bonds.

Italy’s 10-year yield now trades above Spain’s, and the spread between the two widened on June 29 to the most since February 2015.