After days of great instability, between sudden peaks and equally rapid declines, the spread between Italian BTPs and German Bunds appeared stable for the last 24 hours. The opening on March 25th is similar to that of the previous day, 89 basis points against 88 on March 24th, but it is mainly thanks to the stalemate in the war in the Middle East, stuck between Trump’s declarations and Tehran’s denials.
Today is also the first day of the month-end government bond auctions. We will start with Short Term BTPs and BTP€i, and then continue in the next few days with BOTs and medium and long term BTPs.
Spread stable for the first time in days
The very beginning of the auctions had become a critical moment in light of the great instability of the bond markets in recent days. At the beginning of the week, the 10-year benchmark BTPs had recorded yields of 4%, which would have entailed an unexpected expense on the debt for the Italian State at a time when every saving counts to bring the country’s deficit back within the 3% limit starting this year.
However, the situation seems to have stabilized. Spread at 89 points and yields at 3.87%, against 2.98% for Bunds, which fell below the psychological threshold of 3% after days of uncertainty. Stability, however, comes from the stalemate of the war in the Middle East, which is the main reason for the instability of recent days.
US President Donald Trump continues to talk about positive talks with Iran and the possible conclusion of the conflict. However, Tehran not only reiterates its denials, but continues to attack the Gulf countries and Israel with missiles and drones. Tel Aviv itself is not taking any steps backwards and has expressed its desire to occupy southern Lebanon.
Italy joins Spain and France
The Italian situation is therefore at a standstill, like that of the other large European countries. While the yields of BTPs varied greatly in recent days compared to Bunds, those of Spanish Bonos remained stable between 50 and 55 basis points away from German bonds. Even on March 25, Madrid remained at a 52 point spread, with yields of 3.50%.
| Government bonds | Returns | Spreads |
| German Bunds | 2.98% | – |
| Italian BTPs | 3.87% | 89 |
| French Oats | 3.69% | 71 |
| Spanish bonos | 3.50% | 52 |
The same situation is going through France. The Oat remained 71 basis points above the Bund at the opening today, with a yield of 3.69%.
End of March auctions underway
The end-of-month BTP auctions begin today, March 25th. The first concerns Btp Short and Btp€i, respectively short-term Treasury bonds and those indexed to Eurozone inflation. The latter are particularly current products, given that a very significant price increase is expected in Europe in March due to the energy crisis.
The submission of applications in the auction will expire at 11:00 today, March 25, while additional applications can be submitted until 3:30 pm on March 26. The subscription regulations will be published the following day. There will be three products offered in total:
- 3-year Short Term BTPs, with a coupon of 2.20%;
- 5-year Btp€ia with 1.10% coupon;
- 10-year Btp€ia with 1.80% coupon.
Two more auctions for medium-long term BOTs and BTPs will be held in the next few days:
- the Bots auction on March 26;
- the auction of medium-long term BTPs will take place on 27 March.
