The spread between Italian BTPs and German Bunds began to grow again at the opening of October 7, reaching 111 basis points. Yesterday evening the differential had fallen to 106 basis points, thanks above all to an increase in yields on Berlin bonds.
However, bond markets remain very uncertain. The strong sell-off on US T-Bonds is continuing and this puts pressure on Europe, which has to compete with securities which, despite being considered extremely safe, have yields of 5.3%.
What’s happening to the spread
In less than 24 hours, the spread between Italian BTPs and German Bunds went from exceeding 130 basis points to returning to 106, before rising again in the morning to 111. However, yields in this period remained relatively stable at around 4.60%. It is therefore the German Bunds that have undergone significant changes.
Bond markets are under pressure
In the last week the Bunds have returned to having a role as a safe haven, which historically they have always had but which had weakened during 2026. Various capitals have poured into German debt, causing yields to drop and therefore widening the spread.
Much of this capital fled the rest of the bond market. In fact, it is not a good time for bonds in general and, in particular, for US bonds. For days, Treasury Bonds have exceeded the psychological threshold of 5.25%, which historically marked the moment in which the American debt crisis also “infects” the stock market.
Many of the fears concern AI and the ability of companies in the sector, which are investing in this technology by issuing trillions of dollars in debt, to earn enough profit to justify the investment.
Europe still volatile
The effects of this instability also manifested themselves on the other government bonds of the major European countries. Spain also added the political crisis to the tensions on the international markets and the Bonos reached yields of 4.12%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.49% | – |
| Italian BTPs | 4.60% | 111 |
| French Oats | 4.81% | 132 |
| Spanish bonos | 4.12% | 63 |
However, France remains the country with the most critical debt situation. Spread at 132 basis points and yields at 4.81%, with a financial package of 40 billion euros of spending cuts that is very difficult to approve.
The next government bond auctions in October
Regular auctions of Italian government bonds begin on Friday. The release dates will be:
- Friday 9 October for the Bot auction;
- Tuesday 13 October for the auction of medium and long-term bonds;
- Tuesday 27 October for the auction of Short Term BTPs and BTP€i;
- Wednesday 28 October for the Bots auction;
- Thursday 29 October for the auction of medium and long-term bonds.
The Treasury will also issue, between 19 and 23 October, a new tranche of BTP Valore.
