Draghi Jolt for European Bonds Has Market Hungry for What's Next
- Credit Agricole sees QE being extended by at least 6 months
- Italy's yield gap over bunds drops to lowest since March
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Euro-area government bonds got a shot in the arm from Mario Draghi this week when he signaled more stimulus was likely by year-end. That served to make investors hungry for details of the changes that will set the tone for the region’s debt market.
Hints from the European Central Bank president helped drive up German securities. Italian and Spanish bonds gained at an even faster pace, narrowing Italy’s 10-year yield premium over bunds to the least since March. Draghi said officials will reexamine the current level of monetary stimulus in December and that they wanted to be “vigilant,” echoing his predecessor Jean-Claude Trichet’s preferred signal for an imminent policy change.