Historic EU budget agreed to muted bond market reaction

By Lewis McLellan
21 Jul 2020

EU leaders ended a marathon 91 hour summit early on Tuesday morning, having agreed a new €1.82tr budget for the bloc, including a much anticipated — and highly contentious — €750bn recovery fund to help member states fight the Covid-19 pandemic. Despite the fierce and protracted debate, market reaction to the news has been muted.

The agreement is not yet final and must be ratified by the national parliaments of the 27 member states.

Government debt of European periphery countries like Italy and Spain rallied by a couple of basis points each on Tuesday morning, while Germany widened 1bp.

However, since the result was broadly ...

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