After days of continuous increases, the spread between Italian BTPs and German Bunds fell in the first minutes of the markets opening on June 9th. The differential narrowed to 77 basis points, one less than yesterday’s close, thanks to a drop in yields on Italian government bonds, which however remain quite high.
On the other hand, German Bund yields are growing, well above the 3.05% threshold. Furthermore, the ECB’s monetary decision is approaching, which should arrive on June 11th, and which should lead to an increase in interest rates and, consequently, also in the coupons of government bonds.
The race of the spread stops
The spread between BTPs and Bunds fell for the first time in days, compared to the close of the previous session. In fact, the spread had continued to grow for almost a week, at a slow but constant pace, widening to almost reach 80 basis points. However, the opening on June 9th led to a reversal of direction, with the spread at 77 points.
The yields on Italian securities fell by two tenths of a percentage point, reaching 3.82%, and recovered against Bunds, which instead suffered a drop of only one tenth. The variations, although minimal, are probably due to the fact that the situation in the Middle East, destabilized by a series of attacks between Israel and Iran, has calmed down in the last few hours.
The ECB’s decision looms over European stocks
The spreads in Spain and France also fell compared to yesterday’s close. The Bonos have moved within 44 basis points of the Bund, while the Oat have returned to a 66 basis point differential. Yields on Spanish bonds fell to 3.49%, while the French equivalent fell to 3.71%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.05% | – |
| Italian BTPs | 3.82% | 77 |
| French Oats | 3.71% | 66 |
| Spanish bonos | 3.49% | 44 |
However, the European Central Bank’s monetary policy decision, expected on 11 June, looms over these figures. The ECB is poised to raise interest rates, a change that could lead to a further rise in yields.
Several long-term auctions cancelled, calendar changed
The Ministry of Economy has announced that the auctions of bonds with a duration equal to or greater than 7 years scheduled for 11 June have been cancelled. In their place there will be a syndicated issue of 7-year and 30-year BTPs in the near future, depending on market conditions. The calendar of auctions of Italian securities therefore changes as follows:
- Wednesday 10 June, Bot auction;
- Thursday 11 June, 3-year BTP auction;
- Wednesday 24 June, auction of Short Term BTPs and BTP€i
- Thursday 25 June, Bot auction;
- Friday 26 June, medium-long term auction.
Furthermore, between 15 and 19 June, the issue of Btp Italia Sì will take place, the government bonds indexed to inflation and designed for retail investors.
