In the first minutes after the opening of the financial markets on 13 November, the spread but above all the yields of Italian government bonds began to increase again. The differential between ten-year BTPs and Bunds reached 106 basis points, while interest rates reached 4.43%, a jump of eight cents compared to yesterday’s opening.
The government bond auctions have concluded with the placement of medium and long-term BTPs. Yields settled between 3.5% and 4.7% depending on the financial products made available by the Treasury. Regular auctions will return at the end of the month.
The increase in the spread once again depends on oil
Tensions return in the Middle East and the spread begins to grow again. In the last few hours several ships have hit mines trying to cross the Strait of Hormuz. United States President Donald Trump has removed Vice President Vance, one of those most opposed to the war with Iran, from his role as negotiator with Tehran, saying that an agreement with the regime is “not necessary”. The Pasdaran finally hit a US radar station in the Gulf.
All this caused the price of WTI oil to increase to 88 dollars and, consequently, the interest on Italian government bonds also increased. Overnight, almost a tenth of a percentage point, from 4.35% yesterday to 4.43% today, signaling that the markets consider the situation of European sovereign debts still very unstable and dependent on possible peaks in inflation. The spread increased slightly, to 106 basis points, only because German Bund yields also rose.
The rest of Europe is also suffering from the increase in oil prices
Yields also increased in the other large European countries, even if the spread remained more or less under control. In Spain the Bonos reached a yield of 3.94% for a differential of 57 basis points.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.37% | – |
| Italian BTPs | 4.43% | 106 |
| French Oats | 4.88% | 151 |
| Spanish bonos | 3.94% | 57 |
In France, however, the Oat, always under greater pressure from the markets, returned above 150 basis points of spread, with a yield of 4.88%.
How the government bond auctions went
The auctions of medium and long-term government bonds ended yesterday, with good results for the Treasury:
- the 3-year BTP, ISIN code IT0005716839, reached a yield of 3.58%;
- the 7-year BTP, ISIN code IT0005722845, reached a yield of 4.04%;
- the 20-year BTP Green, Isin code IT0005631608, reached a yield of 4.73%.
According to the November calendar, next government bond auctions will be held:
- the auction of Short Term BTPs and BTP€i on 25 November;
- the second Bot auction on November 26;
- the second auction of medium and long-term bonds will be held on November 27th.
