Italy Is the Darling of the Bond World for 2021
Bloomberg 12/23/2020 James Hirai and Jill Ward
(Bloomberg) As European bond strategists draw up their top trades for 2021, one popular theme rises above the rest: load up on Italy’s long-dated debt.
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Commerzbank AG, JPMorgan Chase & Co., HSBC Holdings Plc and UBS Group AG are targeting a continued decline in Italy’s 10-year yield premium over bunds, while Deutsche Bank AG prefers positioning for a flatter bond curve relative to its German equivalent. Robeco Institutional Asset Management is opting for the country’s 50-year notes.
Italian bonds pay the euro area’s highest investment-grade yields, and their allure is burnished by the drying up of fixed-income returns across developed markets more than a quarter of the world’s debt now yields less than 0%. Even rates in other peripheral European nations such as Portugal and Spain have turned negative, with dwindling debt returns forci