The spread between Italian BTPs and German Bunds began to fall again, reaching 83 basis points, after days of increases which had led it to record some of the highest peaks in recent months. Yields also stopped their growth, falling again but remaining very high, at 4.20%.
A reduction in the price of oil and a certain optimism on the stock markets in view of the publication of the PMI indices, for which there are high expectations, contributed to this trend reversal. However, the factors that drove yields to three-year highs are still present.
The spread and yields have started to fall again
After difficult days, in which spreads and yields on Italian government bonds continued to grow, the main metrics for judging the health of our country’s public debt have started to decline again. The spread lost two points, going from 85 to 83 basis points, while yields returned to 4.20%, after having also exceeded this threshold in a series of increases that was becoming worrying.
Can the decline in yields and spreads last?
However, none of the factors that had led to the increases in recent months have disappeared. International tensions are still at their highest in years, the Fed’s attitude on rates continues to be ambiguous and some of the main European countries are heading towards a very uncertain electoral phase.
Contingent factors calmed spreads and returns. A drop in the price of oil at the opening and a certain optimism on the stock markets for the PMI indices, a metric that measures company confidence. We will have to see if tomorrow and next week these positive signs will translate into a general improvement in the situation.
Spain always stable, France does not reverse the trend
Among the major European countries, Spain confirms itself as the one with the most stable government bonds. For weeks the Bonos have remained at around 45 basis points from the German Bunds and even the slight fluctuation of yesterday was quickly reabsorbed.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.37% | – |
| Italian BTPs | 4.20% | 83 |
| French Oats | 4.24% | 87 |
| Spanish bonos | 3.82% | 45 |
On the contrary, the increasingly uncertain political and economic situation in France, accompanied by a sharply increasing public debt, is leading the Oats further and further away from the Bunds. The French spread remained at 87 basis points.
The next auctions of government bonds
The declines recorded in the bond markets are good news for the Treasury, which is preparing for the September auctions. The dates to note are:
- September 9th for the Bot auction;
- September 10 for the auction of medium and long-term bonds;
- on 24 September for the auction of Btp Short and Btp€i;
- September 25th for the Bot auction;
- on 26 September for the auction of medium and long-term bonds.
