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Belgium does have a caretaker government. It has been unable to form a government since the June election after the previous government collapsed in April. The Netherlands is also struggling to put a coalition together. Italy comes to the fore on Wednesday with a vote of confidence in the Berlusconi government that has been shaken by a split in the center-right coalition.

It seems largely like a personality issue between Berlusconi and Fini. Berlusconi is to give a speech to parliament at 9:00 GMT in which he will outline (optimistically) the second half of his term (which ends in 2013). There will be a debate about his program and then the confidence vote. The spread between Italy and German has widened out 20 bp over the past five sessions. But this reflects a rally in German bunds, ostensibly on safe haven and less supply, while 10-year Italian bonds are essentially unchanged in this time.

Over the past month, the Italian premium has risen 11 bp (to ~162 bp now). This widening compares with 3 in Spain and 87 bp in Portugal and 83 bp in Ireland. Under-appreciated by many, Belgian bonds have been the worst performing in the eurozone after Portugal and Ireland. This is to say that over the past month, Belgian 10-year bonds have sold off more than Spanish and Italian bonds.

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Source: What to Expect From Italy's Vote on Wednesday