Even at the start of April 30, the spread between Italian BTPs and German Bunds increased, reaching 87 basis points. A growth due to a generic increase in yields across Europe, once again linked to the instability in the Middle East and the new moves of Donald Trump, who is said to have called a meeting of senior military officers at the White House for today to evaluate possible military operations to reopen the Strait of Hormuz.
Auctions for BTPs and CctEu were held yesterday, the last of April. The Treasury raised 9 billion euros in total, but demand was slightly weaker than in the recent past, resulting in a rise in yields.
Btp-Bund spread at 87 basis points, yields close to 4%
Another unstable opening for the spread. The spread between Italian benchmark 10-year BTPs and their German counterparts stood at around 87 basis points, growing again for the fourth consecutive day this week. A result in line with yesterday’s closure, driven by the increasing instability of the ceasefire between the United States and Iran in the Strait of Hormuz.
The increase in yields was significant, growing by a tenth of a percentage point in a single day. The 10-year BTPs now have an interest of 3.99% for the creditors of the Italian state. Bunds have also shown that they are suffering from international instability, albeit less than their Italian counterparts, reaching a yield of 3.12% on the bond markets. The increase in yields on German bonds was smaller than that on BTPs, hence the increase in the spread.
Yields rising across Europe
The other large European countries are also suffering from an increase in the yields of their government bonds. The Spanish Bonos went from 3.52% yesterday to 3.59%, although the spread stood at 47 basis points, remaining close to the rest of the week’s results.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.12% | – |
| Italian BTPs | 3.99% | 87 |
| French Oats | 3.79% | 67 |
| Spanish bonos | 3.59% | 47 |
Similarly, the French Oat are now close to a yield of 3.80%, with a differential of 67 basis points which has burned away all the progress made at the start of yesterday.
The results of the latest April BTP auctions
The end-of-month auctions, which began on April 24th, also concluded yesterday. 9 billion euros were raised, but demand for some of the products offered was slightly weak:
- The BTPs maturing on 1 June 2031 raised 4 billion euros at a coverage ratio of 1.53 and an overall gross yield of 3.32%;
- BTPs maturing on March 1, 2035 raised 1.5 billion euros at a coverage ratio of 1.73, with a gross yield of 3.77%;
- The CctEu maturing on 15 April 2036 raised 3.5 billion euros with a coverage ratio of 1.47, with a gross yield of 3.36%.
The next auctions will be held at the beginning of May:
- the Bots auction on May 7th;
- the auction of medium and long-term BTPs will take place on 8 May.
