Room Seen for 10-Year BTP-Bund Spread to Tighten

0643 GMT – The 10-year Italian BTP-German Bund yield spread could tighten toward the tight end of this year’s anchor level of 180-188 basis points for the coming weeks, with more support than risk seen for the eurozone periphery bonds near term, Citi’s rates strategists write. Moody’s Investors Service didn’t update Italy’s rating on Friday, thus the ‘Baa3’ rating and the negative outlook remain unchanged. “This follows Fitch’s decision of no change the week before and brings this event risk to a benign end,” Citi’s strategists say. Italian government bonds continue to see strong retail demand, while net bond supply pressure is set to diminish sharply in the second half of 2023, they add. The 10-year BTP-Bund spread is trading at 183 bps, according to Tradeweb. (emese.bartha@wsj.com)