Btp-Bund spread at 88 points, yields at 4.38% after the rate increase

On the morning of September 11, the spread with German Bunds reached 88 basis points, one of the highest levels in recent weeks and the second highest of 2026. Yields also set a record, reaching 4.38% for 10-year BTPs, the highest in three years.

It is the effect of the combination of various factors, which start from the behavior of central banks, both the ECB and the Fed, and arrive at the war in the Middle East and that in Ukraine, passing through the growing fear of the 2027 elections throughout Europe.

88 point spread and record yields: what’s happening

The spread between Italian BTPs and German Bunds reached 88 basis points. This is the highest level since March, when the outbreak of war in the Middle East sent financial markets into crisis. This time, however, it is not just a question of a sudden growth in the distance between Italian and German stocks.

Highest returns since 2023

In the morning the yields on 10-year BTPs, those on which the spread is measured, reached 4.38%. Interests haven’t been seen this high since November 2023, during the decline of one of the biggest peaks in recent years. This is not just an Italian problem. On the contrary, the causes behind this increase in coupons are all international.

Why BTP yields are so high

Three factors contributed to causing government bond yields to rise so much:

• the increase in ECB interest rates and the Fed’s uncertain behavior;
• the escalation in the Middle East, the advance of the Houthis in Yemen and the developments of the war in Ukraine;
• the victory of the far right in Germany and the resulting concerns about the 2027 elections in Europe.

These are three elements of instability that create a situation that scares the markets and therefore reduces investments, with a consequent increase in returns necessary to make government bonds more attractive.

Government bond auctions are affected by increases in yields

The impact of these increases is immediately measurable thanks to the auction of medium and long-term government bonds which ended yesterday 10 September. In fact, the yields significantly exceeded the coupons provided by the Treasury:

• 3-year BTP maturing in September 2029, 3% annual coupon, 3.43% yield;
• 7-year BTP maturing in September 2033, annual coupon of 3.35%, yield of 3.98%.
• 50-year BTP maturing in March 2072, annual coupon of 2.15%, yield of 4.16%.

The coverage ratios were all positive, however signaling a rather high demand for Italian government bonds. The auctions at the beginning of September ended with this issue, but the next ones will be at the end of the month:

• 24 September the auction of Btp Short and Btp€i;
• the Bots auction on September 25th;
• the auction of medium and long-term bonds will take place on 26 September.

Yields and spreads in Europe are growing

As mentioned, the increase in spreads and yields does not only concern Italy. Spain confirms itself as one of the most stable countries. The Bonos limited the spread to 47 basis points, also keeping yields just under 4%.

On the contrary, France continues to be the least stable country in terms of public debt among the most important ones in the EU. The Oat reached a spread of 94 points, with a yield of 4.45%.