Italian Bond Yields Set for First Weekly Fall since March


May 21 Reuters Italian yields were set for their first weekly fall since March on Friday and other euro zone bond yields extended declines, supported by dovish comments from European Central Bank President Christine Lagarde.

Less than two weeks before the ECBs next policy meeting, Lagarde said that it was too early to discuss winding down the banks pandemic emergency bond buying, helping further stabilise euro zone government debt following a recent selloff.

The blocs bond yields have risen this quarter as COVID19 vaccinations have accelerated, prompting uncertainty around when the ECB will slow those purchases.

Lagarde said the ECB was closely monitoring borrowing costs, a formulation that usually signals concern.

Yields on Italian bonds, a key beneficiary of the pandemic purchases and which had underperformed peers recently, fell further on Friday, with the 10year yield down 4 basis points to 1.02 at 1258 GMT.

The 10year yields are set to close the week down 5 bps, the first weekly fall since the week ending March 26.

The closely watched risk premium on German debt was down to around 115 bps on Friday, from nearly 125 bps earlier this week.

Other 10year bond yields also extended their fall after Lagardes comments. German 10year yields, the blocs benchmark, were down 3 bps to 0.14, set for their biggest daily fall in 212 weeks.

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