The Italian government bond market rebounded, pulling down yields, after Pierre Moscovici, European commissioner for economic and financial affairs, appeared to soften criticism of Italy’s draft budget, giving some relief to concerns of a standoff between Rome and Brussels. The 10-year Italian government bond yield TMBMKIT-10Y, -3.17% fell 9.5 basis points to 3.575%, narrowing the yield spread against the German 10-year bond TMBMKDE-10Y, +5.32% to around 314 basis points, or 3.14 percentage points. Bond prices move in the opposite direction of yields. The euro extended modest gains after the comments. The euro EURUSD, +0.3755% bought $1.1483, up from $1.1453 late Thursday. Moscovici said the EU would not interfere in Italy’s economic policies, according to Bloomberg News. He also said he was willing to accept different views on the current budget proposal. Moscovici appeared to backtrack from a preliminary letter responding to the budget proposal on Thursday, which said Italy’s draft budget law in its present form did not comply with the EU’s fiscal rules.
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