Italy’s government announced a budget with a target deficit of 2.4%. This is higher than the 2.0% the markets expected. Watch Italian banks and bonds tomorrow as it would appear that will be received negatively.

As we wrote earlier the Italian government said it would release its budget today. The budget was just released (European evening) and the targeted budget deficit is expected to be 2.4%. WSJ writes;

The government, backed by the populist 5 Star Movement and anti-immigrant League parties, targeted a budget deficit of 2.4% of gross domestic product for next year, triple what the previous government had planned.

This is higher than the 2.0% the market had hoped. News was released post Italian markets close, but the Italian EFT EWI declined by 2.0%.  Reuters point out the markets anxiousness about the budget;

Financial markets have been nervous since the government took office in June due to fears its spending plans will boost Italy’s debt, which is already the highest in the euro zone after Greece’s as a proportion of GDP – around 131 percent.

Watch the Italian banks Unicredit (UCG IM), Intensa Sanpaolo (ISP IM), Mediobanca (MB IM) Banco BPM (BAMI IM) tomorrow as the market will give its verdict.