RATES – Italian yields fall after statements by Lagarde | Photo credits: Bernd Hartung / European Central Bank / CC BY-NC-ND 2.0
June 17 (Reuters) – Italian bond yields fell in early trading on Friday after reports the previous evening on statements by European Central Bank (ECB) President Christine Lagarde to the Eurogroup about the mechanism anti-fragmentation under development.
That of ten-year Italian government bonds lost nearly five basis points to 3.812%, its equivalent to five years more than five points to 2.993%.
The difference between the German and Italian ten-year yields (“spread”) thus fell below 210 basis points, against more than 250 points at the highest on Thursday.
According to several sources familiar with the discussions, Christine Lagarde told eurozone finance ministers meeting in Luxembourg on Thursday that the new instrument for preventing fragmentation that the ECB is preparing could be activated when spreads exceed predetermined thresholds, but she did not give precise figures on the level of these thresholds.
She also told ministers that the aim of the tool would be to bring spreads back to normal levels, two of those people added.
The new tool could be used if spreads increase too quickly over a given period, they said. (Report Yoruk Bahceli, French version Marc Angrand, edited by Kate Entringer)