The Italian government bonds gained on Monday after reading weak February industrial production figure. The benchmark 10-year bonds yield, which is inversely proportional to bond price fell 1.72 pct to 1.297 pct and 3-year bonds yield dipped 16.76 pct to 0.059 pct 9:50 GMT.

The industrial production fell in February, reflecting concerns about the pace of recovery that prompted the government to cut this year’s growth outlook. The output declined 0.6 pct m/m (consensus was for -0.9 pct m/m fall), previous reading of +1.7 pct, revised down from +1.9 pct.

The government led by Prime Minister Matteo Renzi last week cut its forecast for economic growth of 2016 and 2016 amid a weaker dynamic of global demand and consumer prices. He said that he targets a GDP rise of 1.2 pct in 2016 and 1.4 pct in 2017, down from previous projections of 1.6 pct for both years.

The country’s unemployment rose in February as a discount on social contributions for businesses hiring more workers on a long-term basis was being phased out, stripping job creation of a key boost. The jobless rate increased to 11.7 pct from a revised 11.6 pct in January. That compares with a high of 12.8 pct at the start of 2014, but it is still almost twice the rate it was in mid-2007.

Lastly, if inflation and GDP growth fail to improve over the coming months, ECB easing will occur sooner rather than later, pushing bonds prices further up.

The material has been provided by InstaForex Company – www.instaforex.com