The spread began to decline again, reaching 80, among the lowest in recent weeks. The differential remains far from the levels of the calmest phase of the war in the Middle East, but the new glimmers of hope for a ceasefire opened by Trump over the weekend have reassured the financial markets.
The auctions of government bonds also contributed to reducing spreads and yields, which ended in July with those of medium and long-term securities. The Treasury obtained 8 billion euros, with relatively high returns for investors.
The spread of August 3, 2026
Since the close of Friday 31 July, the spread between Italian BTPs and German Bunds has reduced by two points, reaching 80. A result that fundamentally depends on two factors:
- the possibility of an agreement between Iran and the USA in the Middle East;
- the results of the July auctions of government bonds.
The combination of these two factors has led to a decline in the yield differential, which however remains relatively high compared to the recent past.
The effect of the Middle East on the spread
US President Donald Trump renounced a major attack on Iran over the weekend, announcing new peace talks. It is not the first time in these five months of war that the US has threatened a “definitive” operation and then given it up. Tehran denied all talks, but the markets still reacted positively.
The 80-point spread represents investor confidence in the Italian economy, also linked to the drop in oil prices. Lower-than-expected inflation data also helped.
Falling returns
Government bond yields are also falling. The 10-year benchmark BTPs reached 3.96%, below the 4% level exceeded several times last week. A level reached also thanks to the results of the latest government bond auctions in July.
The results of medium-long term bond auctions
From the last auctions of government bonds in July, those which concerned medium and long-term BTPs and CctEu, the Treasury obtained 8 billion euros in total. Demand was high for all securities, with a consequent reduction in yields, which stood at:
- at 3.39% for 5-year BTPs (Isin IT0005707614);
- at 4.00% for 10-year BTPs (Isin IT0005706285);
- at 3.95% for 15-year BTPs (Isin IT0005402117);
- at 3.30% for CctEu (Isin IT0005707689).
The August auction calendar is:
- August 12, Bot auction;
- 13 August, auction of medium and long-term bonds;
- 26 August, auction of Short Term BTPs and BTP€i;
- August 27, Bot auction;
- August 28, auction of medium and long-term bonds.
