The Dragons effect continues to be felt on BTP-Bund spread. After the announcement of the president of the European Central Bank, which yesterday opened up the prospect of further easing of monetary policy through a quantitative easing, this morning the yield differential between Italian government bonds and the equivalent German bonds fell again, reaching a minimum of 160 basis points, from the 166 registered last night at the closing. This is the lowest level since December 2010.
It also goes down in parallel return of ten-year Italians, at 3,23%, which had already closed yesterday at the minimum of 2005 (3,26%).
A trader explains that while three years ago “a phase of spread increase began, today we find ourselves in a completely opposite moment. In fact, the question of credit risk seems to have been resolved quite a bit, while the eyes of the market are turned to the moves of the ECB on the deflation issue”.
as to Spain, at the beginning of the day the spread between Bonos and Bund travels at 158 basis points, with a yield on Spanish bonds of 3,19%.
