With falling yields, fixed-rate bond prices rise
Thanks to the European Fund for Reconstruction project, the Recovery Fund, institutional purchases on our government bonds have returned. This allowed the spread between BTP and Bund yields to drop below 200 basis points. Quota 200 is a level considered to be an important watershed as tensions on our public securities are easing below.
The drop in the spread has the immediate consequence of the reduction in bond yields. Being our fixed-income BTPs when their yield falls, prices rise. It is likely that the decline in yields will continue in the coming weeks. So it becomes convenient to invest in public securities by aiming for a rise in prices
This is why it is better to bet on these BTPs now, betting on rising prices
The price of BTPs with the longest remaining maturity are more sensitive to falling yields. Therefore, to make the most of any appreciation of the values of the Multi-year Treasury Bonds, it is advisable to focus on long-term securities. The 10-year BTP, the 30-year BTP, or the BTP expiring in March 2067, are those that are most appreciated with the drop in yields.
But there is another way to focus on government bonds, investing in the Exchange Traded Funds that have an underlying in a BTP basket. On the Milan stock exchange in the ETF segment there are several to bet on. There is also one for the more daring that multiplies the performance of the underlying by 2. It is a leveraged ETF 2 or doubles the performance of the reference basket. Obviously multiplies any losses by 2