Italy rallies after S&P decision but Merkel exit ‘comes at inopportune moment’

Italy’s government bonds rallied to their tightest spreads versus Bunds since the start of the month after S&P opted to hold its rating for the country at BBB, while moving its outlook to negative from stable last Friday. But while there may be some respite for Italy in the weeks ahead, Germany chancellor Angela Merkel’s decision on Monday to step down at the end of her term in 2021 has left analysts fretting about the overall path of the eurozone.