The yield spread between Italian and Spanish 10-year government bonds hit a multi-year low.

According to data from the London Stock Exchange Group, the yield spread between peripheral eurozone countries' government bonds and German government bonds has further narrowed, with Italy and Spain reaching a new milestone in yield spread, hitting their lowest levels since 2008. The yield spread between 10-year Italian BTPs and German government bonds briefly narrowed to 59 basis points, while the yield spread between 10-year Spanish and German government bonds dropped to 39 basis points. Jefferies' Mohit Kumar stated in a report, "We remain positive on the performance of Italy and Spain relative to Germany." The global economist mentioned that the favorable environment for yield spread trading could dominate credit bonds and peripheral country markets in the coming months. Jefferies maintains its long position in peripheral eurozone government bonds and expects the yield spread between Italian and German 10-year government bonds to converge to 50 basis points.