The Italian drama continues, with the European bond markets demonstrating great resilience despite the risks presented by the Italian government’s proposed fiscal policy stance, which has been rejected by the European Commission (EC). Earlier, after receiving Italy’s draft budget, the EC had asked Italy to explain why the government decided not to comply with European Union rules and the agreed government deficit targets for the years 2019–2021. The Draft Budgetary Plan calls for increasing the deficit to 2.4% of GDP in 2019 from 1.8% this year. Italy responded that it is unwilling to modify its draft budget. This stance led the EC, in an unprecedented move, to formally reject the Italian budget and request the government to submit within three weeks a revised budget that complies with European Union fiscal rules.