Euro falls as Treasury-Bund spread widens after 3:00 am NY time
Bund spreads with 10-year Italian and French bonds were marginally tighter
The drop in Bund yields after last week’s run up was a reaction to the worst month for Italian industrial production since 2011. That gives the European Central Bank more reason to maintain an accommodative policy. The “political” spreads between Bunds and, respectively, 10-year French and Italian government bonds were marginally tighter, suggesting that election risk was not the culprit.