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The Italian risk premium, or the spread between the 10-year Italian and German government bond yields, has declined to 95 basis points to hit the lowest level since 2015. 

The yield spread has narrowed from the multi-month high of 122 basis points reached in the second half of January, with the former European Central Bank (ECB) head Mario Draghi securing support to form a new government in Italy that will decide how to spend the European Union’s economic recovery fund of 200 billion euros. 

Draghi headed the ECB through the worst of the Eurozone’s debt crisis in 2012 when he calmed market nerves by stating that the central bank would do “whatever it takes” to keep the bloc together.