The European Union is facing a standoff over new debt rules, and Italy's Bond Market may be the most impacted. The EU member states have been in disagreement over the new rules for months, and with a Europe-wide election approaching, there is increasing pressure to reach a deal. The risk of a 'no deal' is rising, which could weigh on the euro and reignite fears in the European government bond market, particularly for Italy. Italian bonds have already faced pressure, and the country's budgetary plans have not appeased the markets. The existing fiscal rules are set to be reinstated in 2024, but there is uncertainty surrounding enforcement.

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