Long Bono 01/41 vs. Short Bund 05/41

Following the recent tightening of EGB sovereign spreads, particularly with the 10Y BTP-Bund spread falling below 100 bp , the market is now assessing the potential for further tightening in the current risk environment. We have identified several factors—macroeconomic, fiscal, supply, and value at risk—that lead us to adopt a bullish stance on the 15Y Bono vs. Bund, as we believe there is still potential for additional tightening compared to BTPs or OATs. In this context, we are initiating a long position on the Bono 01/41 vs. short Bund 05/41 (entry:78 bp; target:7 0 bp; stop: 82 bp; time horizon: 4m). The main risk associated with this trade is a risk-off sentiment arising from a re-escalation of tariffs, which could result in the Bund outperforming its EGB peers.