Three factors to watch as peripheral bond yields hit 'multi-century' lows

European peripheral debt has rallied this month, after the European Central Bank (ECB) cut interest rates and loosened monetary policy, but should investors cash in or buy more?

While yields have been dropping steadily on eurozone government debt since mid-2012, last week saw them plunge to historic lows – in some cases below yields on equivalent US treasuries or UK gilts. Though the comparisons are skewed by the differing currency denominations involved, Spanish and Italian yields are at ‘multi-century’ lows, according to M&G’s Stefan Isaacs. On 9 June, yields on 10-year Spanish bonds hit their lowest level since records began. Italian yields also plunged to historic lows unseen except during a short period in 1945, according to data from Deutsche Bank. T...