The break from the instability in the bond markets is almost immediately over. After a relatively calm day yesterday, at the start of July 16th the spread between BTPs and Bunds returned to above 80 basis points, a limit which in recent months has made the difference between a spread under control and a sign of crisis.
However, it is government bond yields that are particularly notable. At the opening, BTPs recorded interest of 3.93%, a record that in 2026 was only surpassed on one occasion in March, in the worst phase of the war in Iran. It is precisely the situation in the Middle East that is causing this instability: Washington and Tehran have never seemed so far from an agreement since they began negotiations.
Spreads and returns continue to be unstable
Another chaotic opening for Italian government bonds. BTPs suffered another jump in yields which led to an increase in the spread with German Bunds. The decline in the early hours of yesterday was therefore not enough. In fact, already during the afternoon, the differential had risen close to 78 points.
Spread at 80 basis points
On July 16, the spread exceeded 80 basis points for the second time in a few days. What seemed like an anomaly in a difficult start to the week has resurfaced as the conflict in the Middle East worsened. Since the war began, the spread between Italian BTPs and German Bunds has only rarely exceeded this threshold.
It is a sign of the markets’ concern for international instability and above all for the consequences that the energy crisis due to the closure of the Strait of Hormuz could have on vulnerable countries like ours.
Yields will almost never be this high in 2026 for BTPs
Above all, the yields on Italian government bonds are most striking. In the morning they reached 3.93%, a clear increase compared to yesterday, when they stopped at 3.87%. If in the spring, when the war had just broken out, the spread had been well higher than 80 basis points, interest on government bonds had rarely reached this point.
In 2026 there was only one case, at the end of March, when they had exceeded 4%. Before this case, we would have to go back to November 2025 to find similar shares.
The performance of other European stocks
The stability of German Bunds also contributed to the increase in the spread, which remained around yesterday’s yields, standing at 3.13%, while Italian securities continued to run.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.13% | – |
| Italian BTPs | 3.93% | 80 |
| French Oats | 3.98% | 85 |
| Spanish bonos | 3.54% | 41 |
Same trajectory also for the Spanish Bonos, still at 3.54%, therefore 41 basis points away from the Bunds. However, the difficulties of the French Oat continue, with yields at 3.98% and a spread of 85 basis points.
The next BTP and BOT auctions, how to invest in Italian debt
With the increase in yields, BTPs are increasingly attractive as government bonds for investors. The Treasury is preparing the next auctions, following the good results of those at the beginning of the month. The dates to note are:
- 28 July auction of Short Term BTPs and BTP€i;
- July 29th Bot auction;
- July 30 auction of medium and long-term bonds.
