Bloomberg writes that Greece is no longer the “boogeyman” of Europe, as the country’s 10-year bonds dipped below the 3% threshold. Instead, the article suggests that Italy has replaced Grece as the focus of concern regarding political risk on the continents. Investors fear the recent spat between the Italian populist government with the European Union.

Greek debt may no longer be Europe’s bogeyman.

Yields on the country’s 10-year bonds dropped below 3% for the first time on record, while those on five-year securities dropped below their Italian peers, a sign of the diverging fortunes of the two nations. Italy has replaced Greece as the target for concern about European political risk, meaning Athens has benefited more from demand for higher returns in a low-yield environment.

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“Tumbling bond yields basically force even more of a reach for yield, and in a very thin market like Greece, a squeeze is all too easy,” said Marc Ostwald, global strategist at ADM Investor Services. “The fundamentals story is more a convenience in justifying the reach, rather than the key trigger.”

The yield on Italy’s five-year bonds rose as much as 13 basis points to 1.81% on Friday, a three-month high. That on their Greek equivalents fell as much as 12 basis points to 1.73%, a record low. The rate on Greece’s 10-year debt fell to 2.92%, also an all-time low.

more at bloomberg.com