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Italian Markets Rattled After Tria's Future Is Thrown Into Doubt

  • Two-year notes lead the declines as political risk flares
  • Quiet summer trading adding to liquidity drain, say traders
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ING Bank Strategist Viraj Patel discusses Italian politics, bonds and the euro.Source: Bloomberg
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Italian bonds and stocks fell on concern that Finance Minister Giovanni Tria, whose appointment brought a relative calm to the nation’s markets, may be forced to step down.

Short-end Italian bonds led the declines after La Repubblica reported that the country’s populist leaders were united in battle against Tria over nominations for the leadership of state lender CDP. Five Star Movement leader Luigi Di Maio and League chief Matteo Salvini were said to have gone so far as to “threaten unofficially to use the weapon of seeking Giovanni Tria’s resignation.” The securities briefly pared losses after Di Maio and a Treasury spokeswoman denied the reports.