Italy’s government bonds advanced for the first time in three days as Allianz SE chief economic adviser Mohamed El-Erian said the European Central Bank’s planned debt- buying program is causing market distortions.

The yield premium investors demand to hold Italian 10-year securities over equivalent German bunds will decrease in the short term, said El-Erian, who is also a Bloomberg View columnist.

The spread already narrowed to the tightest since May 2010 on Monday as investors anticipated the start of the ECB’s quantitative easing program this month. ECB President Mario Draghi is set to outline details of the plan after policy makers meet in Cyprus Thursday. Spanish 10-year bonds also rose for the first time in three days.

“You have to be a real outlier like Greece to not be pulled down by the lower rates in the high-quality bonds, but there’s a lot of resource misallocation going on at these levels,” El-Erian said in an interview on Bloomberg Television’s “On The Move” with Jonathan Ferro.

“In the short term, the QE trade is something you should respect, but it’s causing all sorts of distortions.”

Italy’s 10-year yield fell two basis points, or 0.02 percentage point, to 1.39 percent at 10:29 a.m. London time. The rate touched 1.293 percent on Monday, the least since Bloomberg began collecting the data in 1993. The 2.5 percent bond due in December 2024 rose 0.155, or 1.55 euros per 1,000-euro ($1,113) face amount, to 110.17. The Italian-German yield spread narrowed three basis points to 101 basis points.

Yields Tumble

Rates across the euro area have tumbled to record lows as the announcement of ECB purchases sparked fresh demand for securities that investors shunned a few years ago during the debt crisis. The average yield to maturity on the region’s government debt dropped to 0.538 percent on Feb. 26, the least since at least 1995, according to Bank of America Merrill Lynch indexes.

Some yields on euro-area sovereign debt are negative, meaning investors who buy the securities will get less back when the debt matures than they paid.

Spain’s 10-year rate declined one basis point to 1.38 percent and Portugal’s dropped two basis points to 1.91 percent. The yield on similar-maturity German bunds, the euro region’s benchmark sovereign securities, was little changed at 0.38 percent.

The rate on Greece’s three-year notes rose 22 basis points to 14.13 percent as the nation auctioned six-month bills. The Athens-based debt office sold 1.14 billion euros of the 26-week securities at an average yield of 2.97 percent, the highest since April, and up from 2.75 percent at a previous sale on Feb. 4. The bid-to-cover ratio, a gauge of demand, was unchanged from the prior offering at 1.3.