Southern European government bond yields are near record lows as investors anticipated a new round of European Central Bank stimulus to help revive an economy that has had a bumpy recovery from the depths of the Covid-19 crisis.
Italian 30-year government bond yields and Greek 10-year yields fell to record lows on Monday.
This reflects a slower-than-expected economic recovery in Europe and remarks from key policymakers that suggest the need for further monetary and fiscal stimulus, analysts said.
“The main reason is the ever rising probability of ECB support, especially an extension of quantitative easing,” said ING rates strategist Antoine Bouvet.
“Recent remarks by [ECB chief economist] Philip Lane and [ECB executive board member] Isabel Schnabel do suggest this is an environment for duration and spreads.”