Volatility continues in government bond markets. The spread between 10-year BTPs and Bunds reached 76 basis points at the opening on March 12, growing by four points compared to the start of yesterday. There was a clear rise in yields, which reached 3.70%, accompanying the more moderate growth of German ones.
Data that had an effect on the 12-month BOT auction which took place yesterday. Short-term government bonds had a weighted average yield of almost 2.4%. Today the auction of medium and long-term BTPs is taking place.
Spread still increasing: 76 basis points at opening
The extreme volatility of the spread between 10-year benchmark BTPs and their German equivalents continues. After the peak on Monday 9th and the sharp drops on Tuesday 10th, the spread began to increase regularly again and reached 76 basis points at the opening of March 12th. Still low compared to the 84 points at the beginning of the week, when financial markets were in panic due to the price of oil, but still much higher than in the recent past.
Yields are growing rapidly. In just one day the average BTP reached 3.70%, increasing by a tenth of a percentage point compared to 3.60% on 11 March. However, the Bunds also run, reaching 2.94%. German stocks are seeing the psychological threshold of 3% approaching, demonstrating, as already analyzed earlier this week by Reuters, that they are no longer among investors’ favorite safe havens and are instead increasingly sensitive to market fluctuations.
Peak of the French differential
Spain, on the other hand, is relatively stable, with the spread growing by three points but remaining below 50. The Bonos are proving to be among the securities closest to the German ones among the large European countries, thanks to the vigorous economic growth of Madrid. However, the position of clear opposition to the war could annoy the USA.
| Government bonds | Returns | Spreads |
| German Bunds | 2.94% | – |
| Italian BTPs | 3.70% | 76 |
| French Oats | 3.59% | 65 |
| Spanish bonos | 3.42% | 48 |
However, the French Oats succumbed to market pressure. Yesterday, Paris government bonds had taken advantage of the weakness of the Bunds to get closer to their German equivalents, bringing the spread back below 60. At the opening on March 12, however, their yields suddenly reached 3.58%, bringing the spread to 65.
12 month BOT with yields of 2.4%, today the BTP auction
The placement of 12-month BOTs expiring on 12 March 2027 concluded yesterday. The increase in yields in recent days has also significantly increased those of these Treasury bonds. The weighted average yield, which derives entirely from the difference between the nominal value and the sales price, came close to 2.4%, standing at 2.372%.
Today, auctions of three different BTPs will be held:
- 3-year BTPs with maturity on 15 March 2029 and a coupon of 2.40%;
- 7-year BTPs with maturity on 15 March 2033 and a coupon of 3.15%;
- 15-year BTPs with maturity on March 1, 2038 and a coupon of 3.25%.
The next auctions in March will be:
- the auction of Btp Short – Btp€i on 25 March;
- the Bots auction on March 26;
- the auction of medium-long term BTPs will take place on 27 March.
