The spread between Italian BTPs and German Bunds increased again by one point in one day, opening in the first minutes of June 5th at 76 basis points. A trend that manifested itself throughout the week and which led yields to slowly approach 3.80%, reaching 3.78% in the morning.
The week preceding the European Central Bank’s decision on interest rates therefore closes with a de facto stable opening. The pressure from the hawks on an increase in the cost of money to combat inflation could materialize in a decision along these lines.
Spread slightly growing, trend of the week confirmed
Also on Friday 5 June the spread between Italian BTPs and German Bunds showed a slight increase, with a trend similar to that of the previous days. The yields of Italian bonds continue to move away by around one hundredth of a percentage point on average per day, and this has led the differential between the ten-year benchmarks of the two countries to settle at around 76 basis points, one more than yesterday’s opening.
The spread appears to have stabilized close to this figure, without any particular noticeable changes in recent weeks, despite the instability in the Middle East. The contradictory developments of the peace negotiations and the various attacks between Iran, the USA, Israel and Lebanon no longer appear to have particular effects on government bonds.
European spreads stable awaiting the ECB
Other European countries are also experiencing a period of stability in the spreads of their government bonds compared to German ones. The Spanish Bonos continue to remain at 43 basis points, completely unchanged compared to yesterday’s opening but slightly rising compared to a positive closing. Similarly, the French Oat also returned to the June 4 quota, 65 basis points.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.02% | – |
| Italian BTPs | 3.78% | 75 |
| French Oats | 3.67% | 65 |
| Spanish bonos | 3.45% | 43 |
European countries await the European Central Bank’s monetary policy decision, which should be announced on June 11th. There is a lot of pressure on the board of directors from so-called hawks to increase the cost of money and combat inflation caused by the energy crisis. Different government bonds could react in the opposite way to this change, depending on the needs of the individual countries’ economies.
The next auctions of Italian government bonds
Following the ECB’s decision, in the week between 15 and 19 June, an extraordinary issue of government bonds dedicated to the retail market will be held. These are the BTP Italia Sì, which will be indexed to inflation.
The other auctions will take place regularly. The days to note are:
- Wednesday 10 June, Bot auction;
- Thursday 11 June, medium-long term auction;
- Wednesday 24 June, auction of Short Term BTPs and BTP€i
- Thursday 25 June, Bot auction;
- Friday 26 June, medium-long term auction.
