In the first minutes of the opening on August 27, the spread between Italian BTPs and German Bunds began to grow rapidly again, reaching 83 basis points compared to 80 the previous day. A peak that brought the yields of ten-year government bonds back to over 4%, precisely in the days of the auctions of BOTs and medium and long-term securities.
In fact, the Mef will conclude the issuance of Treasury bonds today, while tomorrow it will hold that of medium and long-term securities, with 8.5 billion euros available between CctEu and BTP.
The spread rebounded after yesterday’s decline
On August 26th the spread seemed to be able to return to the levels of the beginning of the month, despite the fact that yields were still relatively high. Yesterday, in fact, the differential had reached 80 basis points, raising hopes of a return to around 75, a level which for weeks had been the center of gravity of the spread between Italian BTPs and German Bunds.
Instead, the trend was immediately reversed, with the differential returning to 83 basis points, on the same levels reached between the end of last week and the beginning of the current one.
Yields hit record levels
This spike was caused by a sudden increase in benchmark 10-year government bond yields. On the morning of August 27th, yields reached 4.05% again, returning to the levels already seen between August 18th and 24th. Record levels, which have not been seen with this consistency since 2023.
Current government bond yields and auctions
This is therefore a delicate moment for Italian stocks. The increasingly unstable international situation, combined with a destabilizing Italian political landscape due to the approaching elections, are putting pressure on public debt and increasing yields.
Furthermore, auctions of government bonds are being held in recent days, with BOTs and medium and long-term securities made available to investors. Today, August 27th, in particular, the Bots auction will end. The medium and long-term one, however, will be held tomorrow, with the following financial products:
- 5-year BTP with 3.15% coupon;
- 10-year BTP with 4% coupon;
- CCTeu (residual life 8 years) with an annualized rate of 3.487%;
- CCTeu (residual life 9 years) with an annualized rate of 3.237%.
How is the spread going in the rest of Europe
The main European countries are also experiencing some pressure on their public debt from the markets, but they are reacting differently. Spain, thanks to a very rapidly growing economy, limited the differential and on 27 August the spread between Bonos and Bunds opened at 45 points.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.22% | – |
| Italian BTPs | 3.85% | 83 |
| French Oats | 4.07% | 85 |
| Spanish bonos | 3.67% | 45 |
France, on the contrary, is experiencing a very rapid increase in the spread, with the OATs being 85 basis points away from the Bunds and presenting yields of 4.07%.
