Italy’s sovereign debt has handed investors the best returns among big global government bond markets so far this year, confounding expectations that a rapid rise in eurozone interest rates would reawaken investor fears over the highly indebted country’s finances.

Italian bonds, which trade at yields far above those of Germany — the eurozone’s de facto haven benchmark — have long been viewed as a barometer of political and financial risks in the currency bloc. But their relative stability this year, even as the European Central Bank ends large-scale bond purchases and ratchets up borrowing costs, has surprised some investors who worried the central bank’s monetary tightening could widen the cracks in the region’s debt market.

“Italy has held up a lot better than we thought it was going to,” said Iain Stealey, international chief investment officer for fixed income at JPMorgan Asset Management. Stealey had expected an underperformance in Italian debt as the ECB cut its bond buying and raised its deposit rate from minus 0.5 per cent in July to 3 per cent at its most recent meeting last month.