The spread between Italian BTPs and German Bunds continues to grow. Even at the opening of April 23, the differential was reported to have risen compared to the previous days, opening at 79 basis points. Yields reached 3.84% on average, signaling a sharp increase from last week.
The reason for this instability is the situation in the Strait of Hormuz. In fact, despite the ceasefire between Iran and the USA, in recent days Tehran seized two civilian cargo ships that had attempted to cross the stretch of sea. A move that demonstrated that Iran has the strength to implement the blockade of the strait.
Spread between BTP and Bund towards 80 points
The spread between Italian BTPs and German Bunds had not reached this morning’s levels for almost a week. At the start of April 23, the spread returned to 79 points, almost touching the threshold from which it had moved away in the last period, that of 80 points. A result mainly due to the closure of the Strait of Hormuz, and the instability of the situation between Iran and the USA in recent days.
The yields of Italian securities have once again exceeded the 3.80% threshold, in a sudden peak compared to recent quotas. At the opening, the yield on the benchmark 10-year BTPs reached 3.83%, just the day before the start of the new auction for the 3-year Short Term BTPs. German Bunds also proved unstable, exceeding the 3% yield threshold.
Europe fears instability in the Middle East
France and Spain are also suffering the consequences of instability in the Middle East. At the opening, the Bonos, Madrid’s government bonds, reached a yield of 3.50% after weeks, with a spread that was overall stable at 46 basis points.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.04% | – |
| Italian BTPs | 3.83% | 79 |
| French Oats | 3.69% | 65 |
| Spanish bonos | 3.50% | 46 |
The differential in Paris is also growing, returning to 65 basis points, with yields approaching 3.70%. European states are waiting for the EU’s extraordinary measures to combat the crisis. Meanwhile, the aviation fuel situation on the continent is worsening, with 20,000 flights canceled by Lufthansa.
Tomorrow the first auction at the end of April
Tomorrow, until 11 am, it will be possible to participate in the auction of Short Term BTPs which have been assigned the Isin code IT0005692410. They will expire on February 28, 2029 and the offer is equal to a maximum of 3 billion euros, including the additional amount.
The auctions at the end of April will be:
- the auction of Short Term BTPs on 24 April;
- the Bots auction on April 28th;
- the auction of medium and long-term BTPs will take place on 29 April.
Two more auctions will be held at the beginning of May:
- the Bots auction on May 7th;
- the auction of medium and long-term BTPs will take place on 8 May.
