BTP/Bund spread and Italy 10y yield
For the non FI experts: I put this post out as a SHORT Investment strategy, which means sell the 10y Italian bond (BTP) futures. Only in terms of yield charts it is a bullish picture as yields rise when bonds are sold.
Left panel: weekly chart of BTP/Bund (Italy 10y over German 10y bond) yield spread
Right panel: BTP Italy 10y yield
The yield already delivered an upside break on the daily chart. Retested support and possibly gives another bullish signal today or tomorrow. Please note that anything up in yields means a sell and a BEARSIH action in Bonds!
Do the math, and start to think about what happens if BTP yield closes back above 0,80 % and same time let's say the risk premium increases, pusing the ridiculously low level of the BTP/Bund spread back above 115-120 bps.
I start to believe that BTP will become a much better strategic short than Bund.
Left panel: weekly chart of BTP/Bund (Italy 10y over German 10y bond) yield spread
Right panel: BTP Italy 10y yield
The yield already delivered an upside break on the daily chart. Retested support and possibly gives another bullish signal today or tomorrow. Please note that anything up in yields means a sell and a BEARSIH action in Bonds!
Do the math, and start to think about what happens if BTP yield closes back above 0,80 % and same time let's say the risk premium increases, pusing the ridiculously low level of the BTP/Bund spread back above 115-120 bps.
I start to believe that BTP will become a much better strategic short than Bund.
