Italian government bonds rose this week, with two-year yields reaching a two-month low, on optimism the nation’s political situation has stabilised after Prime Minister Enrico Letta won a confidence vote in parliament.Thank you for reading this post, don't forget to subscribe!
Bloomberg News reported that Italy’s 10-year securities climbed as former premier Silvio Berlusconi backtracked on a pledge to bring down the coalition amid signs his party would desert him. Spanish debt also gained.
Benchmark Portuguese 10-year yields fell the most since July as the nation passed the eighth and ninth reviews of its aid plan. German bunds fell as European Central Bank President Mario Draghi refrained from signalling that additional measures were needed to boost the region’s recovery.
“Peripheral bonds have breathed a sigh of relief that Letta survived a no-confidence vote,” said Nick Stamenkovic, a fixed-income strategist at broker RIA Capital Markets Limited in Edinburgh. “Reduced political uncertainty in Italy should help to stabilise bonds near-term, while disappointment that the ECB failed to signal an imminent LTRO has weighed on bunds,” he said, referring to the central bank’s Longer-Term Refinancing Operations.
Italy’s 10-year yield fell 26 basis points in the week, or 0.26 percentage point, to 4.30 per cent at 4:59 p.m. London time on Saturday.
The 4.5 per cent bond due in March 2024 rose 2.15, or 21.50 euros per 1,000-euro ($1,359) face amount, to 102.055. Two-year yields fell 25 basis points to 1.64 per cent after dropping to 1.63 per cent on Saturday, the lowest level since August 7.