Exchange traded notes that follow Italian government bonds have bounced back after selling off hard earlier this summer on Eurozone worries. Markets have stabilized somewhat thanks in part to the European Central Bank stepping in to buy huge amounts of Italian and Spanish bonds over the past week.

The ECB intervention has helped push yields lower and bond prices higher, but markets will be waiting to see if investors buy new bonds.

PowerShares DB 3x Italian Treasury Bond Futures ETN (NYSEArca: ITLT) and  PowerShares DB Italian Treasury Bond Futures ETN (NYSEArca: ITLY) have recovered most of their losses from the summer.

The next bond auction is scheduled for Aug. 30, however, and analysts do not expect demand to be high, reports William James for Reuters.

“If the ECB is in there buying with open-ended pockets then that should encourage end-investors to invest alongside it, but the problem is that they have done this before and they haven’t been committed to it,” said Gary Jenkins, head of fixed income research at Evolution Securities, in the report. [Italy ETF Feeling Heat of Debt Crisis]

“Still, some perspective is needed beyond the short term. For instance, the large size of the Italian and Spanish bond markets suggest intervention amounts will be much more than anyone in the council are comfortable in taking and so some dissent going forward is likely,” said Biagio Lapolla and Harvinder Sian, rate strategists at Royal Bank of Scotland Group Plc in London, on Bloomberg. [Italian Stock, Bond ETFs Look for Bounce After Rout]

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