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Investor attention moves to bonds as Euro Sovereign Debt Yields Diverge
Traders are increasing the range of instruments they offer clients as the Eurozone governments grapple with the ongoing Euro crisis.
David Jones, chief market strategist at IG Index told Marketmoves: "Historically, yields across all the eurozone sovereign debt instruments were very similar, with the German issues being seen as the benchmark. However, over the last 12 months there has been a decoupling of this relationship, so the heavily traded BOBL and BUND are no longer a reasonable proxy for other eurozone government bonds. This also means there has been a huge increase in the volumes traded in the underlying market for instruments like BTPs.
"A liquid underlying market - combined with the current levels of volatility and a steady flow of news that has the ability to impact the price - has the potential to make BTPs popular with financial spread bettors. An expanded interest in fixed income instruments as a whole could follow as well.
"Fixed income markets have often been seen as too slow-moving to be of interest to the majority of the financial spread betting community. However, with politicians, central bankers and ratings agencies now having the potential to shift bond yields, and so long as the risk of default looms, the popularity of trading these instruments will continue to build."
IG Index is offering Long-Term Euro-BTP futures contracts as determined by Eurex.
