Italian Bond ETNs Surge as Yields Hit Eurozone-Era Low | ETF Trends

Italy bond exchange traded notes jumped Thursday, with benchmark yields touching a new Eurozone-era low at the government auction, after the unexpected victory of the center-left PD party in the country’s elections.

The leveraged PowerShares DB 3x Italian Treasury Bond Futures ETN (NYSEArca: ITLT) was up 6.5% Thursday while the unleveraged PowerShares DB Italian Treasury Bond Futures ETN (NYSEArca: ITLY) was up 2.2%. Year-to-date, ITLY has increased 9.0% and ITLT jumped 29.7%.

Rome’s auction on 10-year bonds sold at an average yield of 3.01%, Italy’s lowest rate since the country joined the European Union, reports Elaine Moore for Financial Times.

The sale comes days after Italy’s new prime minister Matteo Renzi win in European elections.

“What neither the polls nor market participants predicted was Prime Minister Matteo Renzi’s centre-left PD party scoring a substantial victory,” Morgan Stanley’s European economist Daniele Antonucci said in a Wall Street Journal article. “Financial markets, predictably, responded positively to these developments, perhaps thinking that one near-term risk is out of the way.”

The party promised to increase economic reforms within the country.

“Even though Italian politics may still be subject to setbacks, we believe that the key takeaway is that, after the positive impact of the ‘Renzi effect’, his strengthened position may well lead to a more concrete implementation, and a better formulation, of his economic policies,” Antonucci added.