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Italy’s Supercharged Bond Market Is All About Faith in the ECB

  • Outstanding bond futures positions are the highest since March
  • Commerzbank sees Italy-German bond spread narrowing to 75bps
Ex-Premier Matteo Renzi News Conference
Photographer: Alessia Pierdomenico/Bloomberg

One of Europe’s riskiest bond bets is turning into a telltale sign of how much faith investors have in the central bank’s ability to engineer a smooth recovery out of the pandemic.

Italian benchmark yields are near a six-month low and the government is so flush with cash that it canceled last week’s debt auction. The market is beginning to look like a crowded trade, with the number of outstanding positions in bond futures at the highest since March.