The spread between Italian BTPs and German Bunds remained stable during the opening on September 9th. The differential is still stuck at 82 basis points, while yields have increased slightly compared to yesterday’s close, reaching 4.21%, a record in recent years.
The September government bond auctions also begin today, with two BOTs, one for one year and one for six months. Yesterday, the details of the three medium and long-term BTPs that will go up for auction tomorrow were communicated.
Further growth in yields, the spread remains stable
The spread seems to have consolidated at 82 basis points, awaiting further changes in the factors that are determining this phase of high spread, at least compared to the recent past. BTPs therefore travel at around 0.82% more yield than Bunds, and on 9 September they reached 4.21%.
Why yields continue to be so high
The 4.21% is a share which, excluding the temporary variations of the last few days, has not been seen since November 2023, when government bond yields were in an almost vertical decline following the ECB’s lowering of the cost of money, following the recovery of the 2022 energy crisis.
This is therefore not a usual level. On the one hand, it is precisely the cost of money, expected to rise again with the ECB’s next monetary policy decision, that is pushing yields. On the other hand there is the international situation and the competition from US securities, made unstable by the Fed’s indecisive behavior on rates.
September government bond auctions begin
Today, by 11am, offers for the first September auction will be submitted, which includes two different Bots:
- a one-year Bot, expiring on September 14, 2027;
- a Bot with 4 months of remaining life, expiring on January 14, 2027.
Their returns will be determined entirely by the selling price, as these products do not have a coupon. The coupons of the medium and long-term bonds, which will be auctioned tomorrow, have already been communicated:
- 3-year BTPs expiring in September 2029 for 3.5 billion euros, with an annual coupon of 3%;
- 7-year BTPs expiring in September 2033, worth 3.5 billion euros, with an annual coupon of 3.35%.
- 50-year BTPs expiring in March 2072, 750 million euros, with an annual coupon of 2.15%.
In total, government bonds worth 16.75 billion euros will be auctioned in these two days. Subsequent auctions will be held at the end of the month. The dates to note are:
- on 24 September for the auction of Btp Short and Btp€i;
- September 25th for the Bot auction;
- on 26 September for the auction of medium and long-term bonds.
European spreads remain stable
As with Italy, the other most important European countries also maintained a stable spread. Spanish Bonos are still 44 basis points away from German Bunds, with yields of 3.83%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.39% | – |
| Italian BTPs | 4.21% | 82 |
| French Oats | 4.26% | 87 |
| Spanish bonos | 3.83% | 44 |
French Oats, on the other hand, record yields of 4.26% and one of the highest spreads, 87 basis points.
