Even in the first minutes following the opening on July 17, the spread between Italian BTPs and German Bunds grew. 82 basis points, two more than yesterday morning, a new peak at one of the highest levels in recent weeks. Yields also remained high at levels not seen since last year.
Government bond markets continue to be volatile due to the crisis in the Middle East. After US attacks on civilian infrastructure in Iran, Tehran ordered the Houthis to close the Red Sea. This could cause another increase in inflation, and therefore interest rates, in Europe.
The spread continues to grow, yields stable but still close to the 2026 record
The spread between Italian BTPs and German Bunds does not fall even after yesterday’s peak. Yields remained essentially stable for Rome bonds, but decreased for Berlin bonds, thus causing an increase in the spread.
The spread reached 82 basis points
On the morning of July 17, the spread reached 82 basis points. There hadn’t been a peak of this type since the beginning of May. The differential above 80 is therefore no longer an anomaly, but the new normality of this particularly difficult week from the point of view of international instability.
Investors’ mistrust in Italian government bonds, which causes the spread to increase, is due to the worsening situation in the Middle East. The United States has resumed attacking Iranian civilian infrastructure, as it has not done for months. Iran responded by ordering its allies in Yemen, the Houthis, to close the Bab-el-Mandeb Strait, which connects the Red Sea to the Indian Ocean.
Yields at record levels for 2026
Italian government bond yields remained stable compared to yesterday’s opening, at 3.93%. A share that has not been seen since November 2025, if we exclude a very brief peak at the beginning of March, coinciding with the outbreak of the war between the USA and Iran.
This situation benefits those who invest in government bonds, but risks putting the Government in difficulty. The next financial maneuver will have to be drawn up in the autumn and such high interests could lead to a higher cost of public debt and fewer resources to spend, for example, on the tax cut for medium-high incomes proposed by Minister Giorgetti.
Spanish spread peaks, France increases further
On the European markets there is an increase in the spread of Spanish Bonos. Yields rose 8 cents, to 3.58%, bringing the spread to 47 basis points.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.11% | – |
| Italian BTPs | 3.93% | 82 |
| French Oats | 3.97% | 86 |
| Spanish bonos | 3.58% | 471 |
France’s spread increases slightly again, with yields at 3.97% and a spread at 86 basis points, up compared to yesterday’s peak.
The dates of the next government bond auctions
To take advantage of the high yields on government bonds there will be auctions at the end of the month. In about ten days the Treasury will announce the details. In the meantime, the dates set for the releases are:
- 28 July auction of Short Term BTPs and BTP€i;
- July 29th Bot auction;
- July 30 auction of medium and long-term bonds.
