The start of this week witnessed yet another spike in Italian bond yields, as the country's coalition government continued to grapple with the details of its 2019 budget, and political leaders struggled anew to deliver a consistent message to investors who have grown increasingly concerned about the state's future spending and borrowing plans.
The depth of the market skepticism facing Italy's elected officials was underlined recently by the fact that one of two deputy prime ministers, Matteo Salvini, had to once again spell out that a departure from the euro zone is not an imminent priority for Rome. Another cabinet minister with well-known anti-EU tendencies, meanwhile, felt it necessary to insist that there was "no chance" of Italy defaulting on any of the country's 2.3 trillion euros worth of debt. This is by no means part of any typical European government script.
And in another recent sign of turmoil inside the Palazzo Chigi, Prime Minister Giuseppe Conte's divided cabinet missed by more than a week a significant legal deadline to deliver detailed economic forecast documents to the Italian Parliament. When these finally appeared, the numbers contained in the delayed report were in some cases significantly different from those initially and very publicly proposed by Salvini and his Five Star counterpart, Luigi di Maio.