I European government bonds non-core have accelerated in the first quarter of 2024, exceeding the 400 billion euros in emissions. The trend emerged from a report by Generali Investment, according to which the sprint in sovereign bond placements is justified by a revision of interest rate expectations.
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L’exploit dei bond
In particular, i non-core euro area government bonds (Spain, Portugal, etc.) they are continuing into 2024 the strong performance recorded in the fourth quarter of 2023. The reduction in spreads was almost enough to offset the increase in underlying yields. In a very active market, in the first quarter of 2024 Over 400 billion euros of sovereign bonds have already been issuedequal to more than 30% of the expected annual volume.
The reasons for the acceleration
The net emission since the beginning of the year it has been very high, with over 175 billion euros. Even considering the QT (Quantitative Tightening) of BCEalmost 35% of the net volume of issues has already been placed on the market. Combined with the aforementioned decline in bond market volatility, a modest economic recovery and the ECB’s upcoming key rate cuts, this provides a significant technical support for non-core government bonds of the euro area. Compared to other risky fixed income asset classes, non-core European government bonds do not appear overvalued and low spread volatility implies risk-adjusted spread levels are still quite attractive.
Therefore, since there is no catalyst in sight for atrend reversal sustained, the experts at Generali Investments recommend investing in non-core euro area bonds to benefit from the favorable market context and gain carry.