At the opening of the financial markets, the spread between Italian BTPs and German Bunds stood at 89 basis points. An increase compared to Friday’s opening, but a reassuring decline compared to the closing, when the differential had exceeded 90 basis points after months.
These movements, however, do not depend so much on BTPs but more on a peak in investor interest in German Bunds, which are still considered among the safest government bonds in the world among those of large countries.
Because the spread broke through 90 points, and then returned
The spread data for the opening on Monday 21 September has two aspects to consider. That’s higher than Friday’s open, when the spread was at 87 basis points. But it is drastically lower than last week’s close, when it surpassed the psychological threshold of 90 points, reaching 92.
An increasing figure, therefore, but positive given the prospects with which the spread had closed the week. Italy and its economy, however, have little to do with what happened on the financial markets before and after the weekend.
An unexpected interest in German Bunds
On the afternoon of Friday 18 September, what the agency verified Radiocor it defined a strong flight-to-quality on the part of investors. Several billion euros have poured into German Bunds, considered the safest government bond in the Eurozone, and among the safest in the world.
This caused a decline in Bund yields, an increase in those of other European countries and consequently a sudden widening of the spread. However, there is no real underlying economic data, other than the fears linked to the consequences of the oil crisis caused by the Houthis. News broke over the weekend that Aramco, the Saudi company that manages the extraction and export of crude oil, will not meet some promised deliveries to European refineries in October.
The real data is coming
As far as Italy is concerned, the crucial date will be tomorrow 22 September. In the morning, Istat will publish the final economic accounts for 2025, which will determine whether or not Italy has managed to obtain a deficit/GDP ratio of 3%. This is a fundamental metric, because it decides whether our country will remain in infringement proceedings for excessive deficit.
If this were the case, the resources available for the 2027 Budget, to be approved by the end of the year, would be much more limited. Preliminary data from Istat indicated a deficit/GDP ratio of 3.1%.
How other European spreads are doing
Spain managed to keep the spread with Germany stable, as has been the case for months. The Bonos reached 47 basis points from the Bunds despite the rush of investors to German bonds.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.48% | – |
| Italian BTPs | 4.37% | 89 |
| French Oats | 4.51% | 103 |
| Spanish bonos | 3.95% | 47 |
France, on the other hand, suffered a lot. Oats, which have long been among the weakest securities in large European countries, have exceeded the psychological threshold of 100 basis points, reaching 103.
The next auctions of government bonds
Government bond auctions will also begin again this week, ending on Tuesday 29 September. The dates to note are:
- on 24 September, with the auction of Btp Short and Btp€i;
- September 25th, with the Bots auction;
- on September 29, with the auction of medium and long-term bonds.
