Italy’s risk premium measured by the spread between the Italian and German 10-year bond yields has dropped below 100 basis points for the first time since 2016.
Investors look to be cheering the idea that the pro-European Union (EU) former ECB Governor Mario Draghi will be able to form a govt to navigate the coronavirus crisis and manage funds coming from the EU, as noted by macro analyst Holger Zschaepitz.
So far, however, the decline in Italy’s risk spread has failed to draw bids for EUR/USD. The currency pair is trading flat near 1.1960 – the lowest level since Dec. 1.
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