Is the BTP run destined to last?

Not only the stock and speculative markets, but also the debt securities of developed economies contribute to cheering the spirits of investors.
The one closest to us, Italian investors, is the much loved and discussed BTP, the Italian government bond par excellence, which is attracting attention now more than ever.
What many had defined at the beginning of the year as "the moment for government bonds" initially proved to be a rather difficult period, with yields rising and prices, naturally, at odds, generating concern but at the same time fueling the appetite of those who have long been looking for a profitable alternative to investing in shares.
And it is in these last stock market sessions that the BTP returns to satisfy the capital gains desires of some investors, with a sharp decline in yields and a relative appreciation.
BTP and European government bonds: a look at the trend in yields BTP yields continue to decrease, closing one of the weeks with the biggest decline in the last month.
The hypothesis that the European Central Bank will confirm the end of the rate increase is increasingly discounted by the market, as demonstrated by the decline in the yields of European countries' government bonds.
read also BTPs: what they are, how to invest, risks and taxation According to Goldman Sachs, as early as the second quarter of 2024, the stock markets will witness an easing of the European Central Bank's monetary policy.
Even overseas, a further clue could emerge as early as this week with the sharing by US statistical bodies of important data related to the labor market, such as JOLTs opening and Non Farm Payrolls, with the related Unemployment Rate.
Of course, worse-than-expected data would fuel current market sentiment, potentially causing a continuation of the current trend.
Looking directly at Italian government bonds, a first point of consideration is the parallelism between the performance of European government bond yields.
The confirmation of some slowdowns in the cost of living recorded in Eurozone countries in the last period, such as Germany and Spain, has contributed positively to the decrease in government bond yields of all countries on the continent.
At current values, the market is already projecting itself towards an upcoming easing of monetary policy in April, a hypothesis which however may have been too risky on the stock exchanges.
A rate cut could, therefore, be premature at the same time, generating profit-taking and an opposite movement.
What makes sense to expect? According to Goldman Sachs and Société Générale, the prospects for 2024 remain positive, especially for Southern European countries, as evidenced by the significant reduction in the spread compared to German Bunds.
The slowdown in German inflation to 2.3% fueled bullish bets on government bonds: the benchmark BTP rate fell from 4.12% to 3.61% in less than three months.

Author: Hermes A.I.

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