This article was originally published on ETFTrends.com.
In an effort to curb further rejections from the European Union (EU), Italy is beginning to soften its stance on its budget plans, allowing the Direxion Daily FTSE Europe Bull 3X ETF (EURL) to gain as much as 4% as of 3:00 p.m. ET.
Needless to say, Italy and the EU haven't been seeing eye to eye on the country's proposed budgetary plans, causing the EU to reject the proposals due to its excessive spending, which has caught the ire of Italy's leaders in the process. However, Italy's deputy Prime Minister Matteo Salvini is showing signs that the country could succumb to increased pressure from the EU by lowering its deficit budget.
“If as part of the negotiation, we need to reduce the forecast deficit slightly, that’s not important to us," said Salvini. "“The issue is not the conflict with the EU on a deficit of 2.4 percent, what’s important is that not even a single person is kept out of the core measures.”
Salvini's comments come as Italy has been staunch in supporting their fiscal proposals, communicating to the EU that it will only ease off on its spending plans if given the chance to make its proposals work. EU escalated its efforts to solve the budgetary dispute by announcing that it would issue a fine if Italy didn't alter its spending requirements.
EURL seeks daily investment results that are equal to 300% of the daily performance of the FTSE Developed Europe All Cap Index. The index itself is a market capitalization weighted index that is designed to measure the equity market performance of large-, mid- and small-cap companies in developed markets in Europe.
Italian bonds have faced mounting pressure the last few months since the anti-establishment coalition of the right-wing League and the 5-Star Movement took over office in June. Last year, Italy recorded a government debt equal to more than 130% of the country’s gross domestic product, but has struggled to keep its repayments under control.
The Italian government sent European markets in a frenzy earlier this year due to comments from Claudio Borghi, who heads economic policy for the ruling Lega party, saying the country would be better off if it wasn't tied to a single currency, the euro, and operated on its own currency.
However, if negotiations with the EU continue to show signs of progress, this could benefit EURL moving forward--something traders will keep an eye on.
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