BTP rally, Spread down. JP Morgan: This is how far it will go

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The new week started off on the wrong foot in Piazza Affari where the Ftse Mib sold 0.71%, stopping just below the 19.500 area.

BTP: rush to buy. Rates in sharp decline, the spread also down

Today’s performance in the Italian bond market is very different, from which encouraging indications have come.

The BTP-Bund Spread lost ground and fell 1.93% to 172.7 basis points and strong purchases affected the BTPs which saw yields facing a heavy fall.

For example, the 10-year one ended the trading not far from the intraday lows, stopping at 1.29%, with a drop of 4.66%.

At a European level, the bond market moved with caution today, complicating some concerns related to the evolution of coronavirus in some countries, such as the United States.

BTP, the best in the EU. Less tense relations between the German Court and the ECB?

The best performance today in the Old Continent was achieved precisely by the BTP and the BTP-Bund spread, supported by the positive bet on a less tense relationship between the German High Court and the ECB.

The first will soon welcome a new member appointed by the Greens and will greet the president of the court who, with a sentence issued in May, gave the ECB three months to justify his plan to buy government bonds in the Qe, under penalty of Germany exemption.

The hunt for yields has also contributed to favoring the rise of BTPs today and the drop in the spread, which has therefore led to preferring Italian bonds over Spanish and Portuguese stocks.

BTP and Spread: Tltro auction outcome will favor new drops. Danske’s view

Overall, the intonation of the tricolor bond continues to be positive also in the wake of the indications received last week from the ECB’s Tltro auction.

Danske Bank analysts spoke of demand slightly below their forecasts, but their idea is that expected dynamics should still prevail and therefore support bonds and exert downward pressure on spreads, especially in peripheral countries “.

BTP and Spread: JP Morgan sees declines in yields and spreads. Here’s how far

JP Morgan’s experts are optimistic about the future of the European bond market, including the Italian one.

The latter expect euro area government bond yields to decline further by the end of the year.

In detail, the US bank expects that the Bonos-Bund spread will travel around 60 basis points at the end of 2020, while the BTP-Bund spread will have room to narrow again and close the year at 130 basis points, more than 40 lower than current levels.

The view of the analysts of JP Morgan is therefore bullish on the BTPs, but also on the Spanish government bonds, unlike the indications provided for the Bund, whose 10-year yield should rise to -0.3% by the end of 2020, compared to the prices currents at a step of -0.44%.

Spread BTP-Bund: here’s what will bring it down according to JP Morgan

The American bank is betting on a reduction in the BTP-Bund spread and in the rates of Italian government bonds, also due to the fact that in its opinion the dynamics of supply and demand of bonds will become even more favorable in the second half of 2020.

Experts predict that the pace of emissions will decrease in the future, especially in the suburbs, after massive placements in the first half of 2020, and this will therefore favor countries like Italy.



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