Btp-Bund spread at 126 points, yields at 4.71%, what's happening

The spread is starting to worry. The spread between Italian BTPs and 10-year German Bunds reached 126 basis points, growing by 23 points in one day. Italian yields exceeded 4.70%, while German ones fell, widening the gap.

The markets reacted to the increases in oil prices, but above all to the announcement of the dispatch of new US warships to Iran. It seems increasingly likely that the war could start again, while Treasury Bonds, American government bonds, are heading towards a yield threshold that scares experts: 5.25%.

Spreads at the highest levels for almost two years, what is happening on the markets

Since the end of October 2024, the spread between Italian BTPs and German Bunds has not reached 126 basis points as it did at the opening on 2 October 2026. It is a jump of 23 basis points in 24 hours, even if yields only grew by seven hundredths of a percentage point.

What increased the differential was above all a sharp drop in yields on German Bunds, which went from 3.61% yesterday to 3.45% today. A signal from the markets, which have always treated Berlin securities as a safe haven in times of uncertainty.

Oil, inflation and the 5.25% threshold for Treasury Bonds

Yesterday on the bond markets there was a figure that worries investors: Treasury Bonds, US government bonds, exceeded 5.25% yield. This happened for various reasons, but above all due to the fact that the Trump administration does not seem willing to address the inflation that is affecting the country and, on the contrary, appears ready to restart attacks in Iran.

5.25% is not just any threshold. Historically, when Treasury Bonds exceed it, the correlation between their performance and that of the stock market reverses. If normally the higher the yields, the more the price lists increase, above 5.25% fear prevails, and the stock markets begin to lose ground, while government bonds begin to destabilize.

Spain and France are also in difficulty

The difficulties on the bond markets are also manifesting themselves in Spain, a country which until now had only been relatively affected by the volatility. The Bonos spread reached 66 basis points on October 2, with a yield of 4.11%.

*Spreads and yields of European government bonds at the opening on October 2, 2026*
Government bonds	Returns	Spreads
German Bunds	3.45%	–
Italian BTPs	4.71%	126
French Oats	4.94%	149
Spanish bonos	4.11%	66

However, it is France, shaken by student protests, that shows the most vulnerability to this situation. With a deficit struggling to fall below 5%, the Oat reached a spread of 149 basis points.