Continue To Outperform

BTPs continue to outperform, with the 10-year BTP/Bund spread -5.5bps at 133.5bps, trading at the tightest level seen since early 2022.

• There hasn’t been much domestic news, leaving familiar drivers (carry & search for yield, amongst others) at the fore.
• Broader peripheral 10s have also tightened vs. Bunds but lag BTPs.
• European equities are off intraday highs but remain firmer. The domestic FTSE MIB is also 0.6% higher.
• BTP futures are +38 at 119.01, trading just above the March 5 high at 118.90. A clear break of this hurdle would point to a bullish reversal and signal scope for a continuation higher near-term. This would open 119.26, the Jan 4 high, ahead of the 120.00 handle.
• The Italian cash curve has bull flattened, with the 2s10s curve at its flattest since July 2023, currently -1.2bps at 25.0bps.
• We noted earlier that Commerzbank "expect further tightening [of the BTP/Bund spread] towards the pre-pandemic lows.”