For an investor in the euro zone, it is better to buy Italian debt than US debt

European investors are buying significant amounts of US Treasuries. Yet: Corrected for currency risk, the yield on a dollar-denominated bond is low for a European, especially as the rate cuts decided by the Federal Reserve will weaken the dollar; Italy will not exit the euro, there will be no debt restructuring or excessive fiscal deficit in Italy, and the yield spread between Italy and Germany is likely to tighten. For a European investor, Italian debt should therefore be more attractive than US debt; besides, non-residents are starting to buy significant amounts of Italian bonds.