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Eurozone Bonds Rally on Impromptu ECB Meeting; Italian Spread Narrows Sharply

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© Reuters.

By Geoffrey Smith

Investing.com — Eurozone government bonds rallied hard on Wednesday, driving yield spreads across the bloc lower, as the European Central Bank confirmed reports that it is to hold an unscheduled council meeting to discuss recent volatility.

The yield on the benchmark Italian 10-Year bond fell 22 basis points to trade a fraction below 4%. It had risen above 4% for the first time since 2014 on Tuesday, as investors fretted about the ECB’s first interest rate rise in a decade.

That brought the spread between the Italian and German benchmarks back down to 324 basis points, still an uncomfortably wide margin for the ECB, which tries to ensure that borrowing conditions across the currency union stay reasonably uniform. Spreads to other, weaker economies around the Eurozone periphery such as Portugal and Greece have also widened sharply in recent days, but followed the Italian lead on the back of the news.

Spreads had started to blow out on Thursday after ECB President Christine Lagarde had failed to give any detail about what it might do to stop what it calls “financial fragmentation.”

Eurozone Bonds Rally on Impromptu ECB Meeting; Italian Spread Narrows Sharply

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