The Italian bond market shows a bounce. Due to the decisions of rating companies and budget problems, the profitability of the public bonds bounced off the record lows. The bonds started to go down in price when Standard and Poor's downgraded the country's credit rating by one notch.
Angela Merkel’s statement also had a negative impact on securities. The Chancellor of Germany demanded the implementation of additional reforms from France and Italy.
All these events may have a local character. The point is that the main idea on the market is interlaced with the possible introduction of the European QE that is to begin next year, according to most specialists. It is clear that the current speculative play is based upon these expectations. Therefore, Spain’s bonds are rising for the fourth week in a row. The ten-year bond yield is 1.83% and hardly changes.
According to the investment declaration, many funds are not allowed to invest in the securities with a rating lower than the investment one. Owing to this reason, in case of a future fall, they have to be sold out.