(Corrects October 2020 high in paragraph two to 0.831% (not 0.31%), no other changes to text.)<\/p>\n
* Euro zone periphery govt bond yields tmsnrt.rs\/2ii2Bqr<\/p>\n
LONDON, April 26 (Reuters) – Euro zone bond yields edged higher on Monday, amid a growing sense that the worst may be over for the bloc\u2019s coronavirus-battered economy.<\/p>\n
Italy\u2019s 10-year bond yield was up 1.5 basis points, after hitting its highest since October 2020 at 0.831%, up 5 bps, as prices fell and the gap over German peers widened out to 107 bps – the most since March.<\/p>\n
Analysts noted upcoming supply as one reason for weakness in peripheral bonds, along with a feeling that a brighter outlook for the euro area could encourage the European Central Bank to slow the pace of its bond-buying stimulus in the months ahead.<\/p>\n
\u201cBonds are a bit on the back foot, and that might be in anticipation of a generally less supportive ECB environment after June,\u201d said ING senior rates strategist Antoine Bouvet.<\/p>\n
\u201cThat\u2019s the main factor, and also when we get an environment where rates are moving higher, there tends to be greater volatility in Italy versus say the German bond market.\u201d<\/p>\n
The ECB\u2019s Fabio Panetta eased worries by saying the ECB could and should keep credit cheap for a long time, even if borrowing costs rise due to a booming U.S. economy.<\/p>\n
Furthermore, net PEPP purchases in the week ending April 23 came in at 22.2 billion euros, the largest weekly net purchases number since end-June 2020, according to Refinitiv IFR.<\/p>\n
\u201cBTPs are discounting the supply of these weeks (with today news of 30y in USD) and there is probably some fear for the 2021 deficit expected to be around 11%,\u201d Mauro Valle, head of fixed income at Generali Investments, said.<\/p>\n
Valle continues forecasting a German Italian bond yield spread at around 100 basis points.<\/p>\n
U.S. Treasury yields were little changed on Monday before the Treasury Department sells $183 billion in debt, and ahead of this week\u2019s Federal Reserve meeting.<\/p>\n
Italy has hired Citigroup Global Markets Europe AG, Deutsche Bank AG and Morgan Stanley Europe SE as lead managers for a new fixed-rate SEC-registered global bond in dollars, the Treasury said on Monday.<\/p>\n
Greek 10-year yields were flat at 0.93%, shrugging off S&P\u2019s decision on Friday to lift Greece\u2019s rating a notch to \u2018BB.\u2019<\/p>\n
Germany\u2019s Ifo institute said its business climate index, viewed as a leading economic indicator, edged up to 96.8 in April, rising less than expected.<\/p>\n
Germany\u2019s 10-year Bund yield was up half a basis point at -0.25%, but below seven-week highs hit last week.<\/p>\n
Andreas Billmeier, European economist Western Asset, said the uptrend in European bond yields should be gradual and fits in with the overall picture of a recovering economy.<\/p>\n