The five-year Italian yield exceeds the Greek equivalent for the first time since 2008

The yield on five-year Italian government bonds rose for the first time in more than a decade in relation to the Greek debt of the same maturity, highlighting the divergence of investors' views on the two countries in the zone. euro.

The weak growth and quarrels between the Italian coalition government and the European Commission over rising debt levels led investors to sell Italian sovereign bonds, increasing yields. At the same time, investors turned to Greek debt, the country emerging from a long period of economic hardship and three bailout programs.

Italian five-year bonds were trading at a yield of 1.792% on Friday, and their Greek counterparts at 1.789%. The yields on Italian securities of this maturity have not closed a trading day higher than Greek yields since 2008, according to Bloomberg data. Yields go in the opposite direction to prices.

The European Commission wrote to Rome this week to warn the Italian government that it was breaking the bloc's debt rules. At the same time, data published by Istat, the Italian statistical agency, revealed Friday that the third economy in the euro area fell by 0.1% in the first quarter compared to the same period last year .

Chiara Cremonesi, fixed income strategist at UniCredit Research, said an environment that is not conducive to risk-taking in Europe, combined with a political back and forth between Brussels and Rome, had discouraged investors .

"The market is extremely sensitive to the headlines at the moment. Feelings about the country are fragile, "she said, adding:" We are facing a few months when volatility will remain high. "

Simona Gambarini, market economist at Capital Economics, added that the decision reflected "Italy's comparatively worse economic outlook, a less sustainable debt and increased political risk".

"If growth in Italy deteriorates, concerns about the sustainability of its debt should intensify, which would put upward pressure on yields, while those of Greece would probably not be affected", she added.

Friday's bond movements contrast with investors' appetite for Thursday's Italian debt: 2.75 billion euros in bonds at 10 years and 1.89 billion euros in bonds. Euro 5-year bonds were sold at an auction with solid demand.