The spread between Italian BTPs and German Bunds remained effectively stable at 73 basis points, confirming one of the longest periods of calm on the bond markets since the start of the war in the Middle East. For almost a week, yields and spreads on European government bonds have remained stable, awaiting concrete developments.
Not even the promises of interest rate increases in June by the hawks of the ECB or the announcements by Iran and the US that they are moving closer to an agreement have moved the markets, which seem to have become accustomed to the constant geopolitical and economic instability that has characterized the last few months.
Stable spread between Italy and Germany
Even in the last weekly opening of the financial markets, the spread between Italian BTPs and German Bunds remained effectively stable. 73 basis points divide the government bonds of Rome from those of Berlin, with yields practically unchanged compared to recent days. The benchmark 10-year BTPs have an average coupon of 3.70%, while the 10-year Bunds have an average coupon of 2.97%.
This stability is not a given. The last week was no different from the previous ones as regards the factors that, in recent months, have led the spread to continuous peaks and equally continuous collapses. The war in the Middle East continues to be at a standstill, amid rumors of an imminent agreement and a resumption of US bombing of Iran.
At the same time, something has also moved in terms of monetary policy, with some of the most conservative members of the ECB saying they are ready to support an increase in interest rates as early as June. Despite this, yields and spreads remained stable, demonstrating a certain resistance to international instability.
Stability also in the rest of Europe
Not even France and Spain showed any particular movements, returning to the yields of the beginning of the week after yesterday’s slight peak, again attributable to a change in the economic situation and not to a new upward trend.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 2.97% | – |
| Italian BTPs | 3.70% | 73 |
| French Oats | 3.59% | 62 |
| Spanish Bonos | 3.39% | 42 |
Spanish Bonos reached yields of 3.39%, with a spread on German Bunds of 42 basis points. At the same time, the French Oat remained just below the threshold of 3.60%, with a spread of 62 points.
The May auctions concluded, the calendar of the next issues
The auctions for government bonds for the end of May ended yesterday. The final details of the results will be known today, when the portions of titles dedicated to specialists will be assigned. The collection will however exceed 25 billion euros, with returns that vary, depending on the securities, between 2.5% and 3.7%.
The next auctions will be in June. The dates to mark on the calendar are:
- June 12, Bot auction;
- 13 June, medium-long term auction;
- June 26th Bot auction;
- 27 June auction of Short Term BTPs and BTP€i;
- 28 June medium-long term auction.
In addition to the auctions, an extraordinary issue will be held, dedicated to retail investors. The Treasury will in fact put the new BTP Italia Sì on the market.
