LONDON May 16 The premium investors demand for
holding lower-rated southern European bonds over top-rated
German peers fell sharply on Tuesday, in a sign of growing
confidence in the bloc's economic and political outlook.
Bond yields in Italy, Spain and Portugal all fell 4-5 basis
points each , with
sentiment buoyed by talks between the bloc's main powers,
Germany and France, which may open the door to changing treaties
to facilitate ambitious reform.
A robust first quarter growth report for the bloc gave a
The gap between 10-year Italian and German bond yields
dropped below 180 basis points for the first time
in a week and was down from 185 bps on Monday. The
Portuguese/German 10-year yield spread fell below 300 bps to its
tightest level since August.
"There is risk on sentiment, thanks to solid economic
indicators," said Sebastian Fellechner, a rates strategist at DZ
Bank. "Political risks have also faded and (French President
Emmanuel) Macron's visit to Berlin is also contributing to the
(Reporting by Dhara Ranasinghe, Editing by Abhinav Ramnarayan)