The spread between Italian BTPs and German Bunds recorded an increase again at the opening of 7 July. The spread grew to 78 basis points, one of the highest levels in recent weeks. This increase is due to a growth in yields which involved both the Rome and Berlin securities.
Despite this peak, the trajectory of the spread seems to have remained the same since mid-April, with cyclical increases and decreases which, in the medium term, are leading to a slow decrease in the spread. The BTP and BOT auctions will begin in the next few days, the results of which could help contain the spread.
Spreads and returns are growing again
After a few days of calm, punctuated by the weekend, instability has returned to the European government bond markets. At the start of July 7, there was a significant movement in yields for both 10-year benchmark Italian government bonds and their German equivalents.
BTPs reached a yield of 3.75%, seven cents higher than yesterday’s opening. Not as clear, but still significant, was the increase in interest on German Bunds, which reached 2.97% from 2.92% in recent days. The result was a two basis point widening of the spread, which went from 76 to 78 basis points.
In recent weeks, 78 basis points has been the maximum distance between BTPs and Bunds. The peaks of the differential never exceeded this level, generally remaining far from 80.
Other European stocks are also unstable
Slight improvement in the situation compared to yesterday, however, for Spain. The Bonos narrowed their spread slightly to 47 basis points. However, yields increased by four hundredths of a percentage point.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 2.97% | – |
| Italian BTPs | 3.75% | 78 |
| French Oats | 3.71% | 74 |
| Spanish bonos | 3.44% | 47 |
A clear worsening, however, for the French Oat, which gained a good five basis points in spread, reaching 74, one of the highest levels since the peaks of the worst period of the war in the Middle East.
First details on the July auctions
The first details emerge on the July government bond auctions. Next Thursday 9 July, a single 12-month Bot will be auctioned, the first tranche of a new product. 8 billion euros in government bonds will be offered, with a maximum additional amount of 800 million. The other dates for the July auctions will be:
- 0 July auction of medium and long-term securities;
- 28 July auction of Short Term BTPs and BTP€i;
- July 29th Bot auction;
- July 30 auction of medium and long-term bonds.
