Italy bond yield falls on Fitch ratings upgrade

LONDON, December 6, Reuters -- Italy's 10 year bond yield fell to a two-week low on Monday, pushed down by a ratings upgrade from Fitch.

On Friday, Fitch Ratings lifted Italy's sovereign credit rating by one notch to BBB, citing confidence in the economic outlook supported by the use of the European Union's post-pandemic recovery fund.

Italian bonds saw a positive start to the week, with prices rising and yields falling. Italy's 10 year bond yield fell by 2.5 basis points to around 0.90% a two-week low.

Rainer Guntermann, a Commerzbank rates strategist said that BTPs in particular should see further tailwinds from the rating upgrade by Fitch.

Italian bonds, also known as BTPs, outperformed euro zone peers, with broader markets generally subdued as investors wait for more details on the new Omicron coronaviruses variant and what it means for the global outlook and European Central Bank policy.

Germany's benchmark 10 year Bund yield was down just a basis point in early trade at around 0.39%. The bond yields in the bloc were just a bit lower on the day.

The ECB may make a policy for a relatively short period at the meeting this month, but should not delay a decision as markets need direction, Christine Lagarde, President of the European Central Bank, told Reuters on Friday.

Bond strategists expected to issuance in the euro area to be around 10 billion euros this week, which is a steep decline ahead of the end of the year. Many of the bloc's issuers are expected to unveil their issuance plans for the year ahead.