October 3, 2018 / 6:23 AM / in 18 days

Italy's bond yields fall on reports of lower budget deficit targets for 2020, 2021

LONDON, Oct 3 (Reuters) - Italy’s government bond yields fell sharply on Wednesday, following reports that Rome will target lower budget deficits for 2020 and 2021 compared with 2019.

Bond yields across the curve were down 8 to 16 basis points in early trade, retracing some of the sharp rises of previous sessions .

Italy’s 10-year bond yield was down 9 bps at 3.34 percent , with the gap over benchmark German Bund yields narrowing to around 290 bps from around 300 bps in late Tuesday trade.

Italy targets the budget deficit to fall to 2.2 percent of gross domestic product in 2020 and to 2 percent in 2021 from an expected 2.4 percent next year, a government source from the right-wing League party said on Wednesday.

The 2020-2021 numbers were first reported by daily Corriere della Sera and La Repubblica, lifting the euro during Asian trade. (Reporting by Dhara Ranasinghe Editing by Andrew Heavens)

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