Eurozone: Narrowing of "QE premia" - Rabobank

Analysts at Rabobank are looking at the narrowing of “QE premia” in periphery and core in recent months and conclude that cyclical factors alone cannot explain these moves.

Key Quotes

“Our analysis argues strongly that 10y Spain is close to a structural floor vs. Germany and that OAT spreads have little room to run.”

“For Italy, there looks to be a further c. 25bp of upside which would take the 10y spread close to 120bp vs. Germany. Political concerns are a clear challenge here, though.”

“Portugal’s fortunes are tied to Italy’s as BTPs’ clear liquidity advantage sees it unlikely PGBs can sustainably outperform their Italian counterparts.”