Another rising opening for the spread between Italian BTPs and German Bunds, which ends the week with a rise. The spread reached 75 basis points, growing by another point compared to yesterday. This despite the fact that yields remained effectively stable, with only a slight decline in those of Berlin government bonds to justify the growth in the spread.
The BOT auction also ended yesterday, from which the Treasury obtained 6 billion euros with excellent demand. Yields stabilized just below 2.5%.
Spread still rising
The trend in the spread between BTPs and Bunds this week was also confirmed at the opening on June 26th. Yields generally falling, now back to the levels of the first days of war in the Middle East, albeit far from the 3.30% before the conflict. The 10-year benchmark bonds have in fact reached a 3.60% yield, stable compared to yesterday, a level not seen since March 10th.
The spread, however, continued to grow. Another point gained, 75 basis points in total, five more than the low of 70 reached at the beginning of the week. It is the effect of the decline in German Bund yields, faster than that of BTPs. Even on June 26, while Italian bonds remained firm, those of Berlin lost another cent in average yield, moving away in comparison.
Movement also in Europe
For the first time this week, the other large European countries are also starting to feel the effects of the drop in German bond yields. Spanish Bonos gained one point of yield, reaching 3.34%. The spread between Bonos and Bunds therefore increased to 49 basis points.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 2.85% | – |
| Italian BTPs | 3.60% | 75 |
| French Oats | 3.52% | 67 |
| Spanish bonos | 3.34% | 49 |
Likewise, French Oats kept yields stable, following the trajectory of Italian BTPs, and the spread with their German counterparts grew to 67 basis points. A reaction also due to yesterday’s ECB economic bulletin, which warned that inflation will not return to 2% before 2027, suggesting that interest rates could remain high.
Success for the Bots auction, the June ones end today
The BOT auction brought 6 billion euros into state coffers through two products, both 6-month. The composite gross returns were:
- by 2.463% for the Isin code IT0005711749;
- of 2.494% for the Isin code IT0005719536.
Today the June auctions will end with the four medium and long-term government bonds, including BTPs and CCTEUs. Emissions will then return in July, on these dates:
- July 9th Bot auction;
- 10 July auction of medium and long-term bonds;
- 28 July auction of Short Term BTPs and BTP€i;
- July 29th Bot auction;
- July 30 auction of medium and long-term bonds.
