Italy’s 10-year bond yields suffer their biggest monthly decline since 2013
London: Italyis 10 years old bond yield It was on track for its biggest monthly decline since 2013 on Friday, even as yields moved slightly higher as traders prepared to log off for the year.
Italian 10-year yields have fallen 60 basis points (bps) this month due to a slowdown in euro zone inflation. European Central Bank An end to its tightening cycle has investors betting on a bigger rate cut in 2024. Yields move inversely to prices.
Euro zone bond yields rose in thin trading on Friday as many market participants were off for the holidays.
GermanyThe 10-year yield, the benchmark for the euro zone, was last up 5 bps at 1.994% as investors booked profits ahead of the start of 2024. It hit a one-year low of 1.896% on Thursday. Italy’s 10-year yield was up 3 bps at 3.479%.
“Investors are taking a breather before buying again in a market where sellers are very limited,” said Florian Ilpo, head of macro. Lombard Odier Investment ManagementReferring to the recent rally in the stock and bond markets.
German 10-year bonds fell 45 bps in December, the most since July 2022. It has declined 57 bps this year, its best year since 2014, after a November and December rally rescued the fixed income market from near-unheard of collapse. Third consecutive year of decline.
Germany’s 2-year bond yield, which is sensitive to ECB rate expectations, was last up 1bp at 2.371%. It declined 43 bps in December, putting it on track for its best month since 2008.
Investors have raised expectations of an ECB rate cut next year as inflation has eased and central bankers have taken a dovish stance.
According to money market prices, they expect borrowing costs to fall by about 165 bps in 2024 and there is about an 80% chance of the first cut in March.
“Personally I have a little doubt why (yields) should go lower than here,” said Emmanuel Karimalis, rates strategist at UBS.
Karimalis said governments will sell a lot of debt next year and January is typically a busy period for issuance which could put pressure on yields.
The gap between Italy and Germany’s 10-year bond yields last stood at 162 bps. Spreads, a measure of investor sentiment toward the euro zone’s more indebted countries, fell to 154 bps on Wednesday, the lowest since June.
Italian 10-year yields have fallen 60 basis points (bps) this month due to a slowdown in euro zone inflation. European Central Bank An end to its tightening cycle has investors betting on a bigger rate cut in 2024. Yields move inversely to prices.
Euro zone bond yields rose in thin trading on Friday as many market participants were off for the holidays.
GermanyThe 10-year yield, the benchmark for the euro zone, was last up 5 bps at 1.994% as investors booked profits ahead of the start of 2024. It hit a one-year low of 1.896% on Thursday. Italy’s 10-year yield was up 3 bps at 3.479%.
“Investors are taking a breather before buying again in a market where sellers are very limited,” said Florian Ilpo, head of macro. Lombard Odier Investment ManagementReferring to the recent rally in the stock and bond markets.
German 10-year bonds fell 45 bps in December, the most since July 2022. It has declined 57 bps this year, its best year since 2014, after a November and December rally rescued the fixed income market from near-unheard of collapse. Third consecutive year of decline.
Germany’s 2-year bond yield, which is sensitive to ECB rate expectations, was last up 1bp at 2.371%. It declined 43 bps in December, putting it on track for its best month since 2008.
Investors have raised expectations of an ECB rate cut next year as inflation has eased and central bankers have taken a dovish stance.
According to money market prices, they expect borrowing costs to fall by about 165 bps in 2024 and there is about an 80% chance of the first cut in March.
“Personally I have a little doubt why (yields) should go lower than here,” said Emmanuel Karimalis, rates strategist at UBS.
Karimalis said governments will sell a lot of debt next year and January is typically a busy period for issuance which could put pressure on yields.
The gap between Italy and Germany’s 10-year bond yields last stood at 162 bps. Spreads, a measure of investor sentiment toward the euro zone’s more indebted countries, fell to 154 bps on Wednesday, the lowest since June.
