The spread continues to decline, with the differential between German 10-year BTPs and Bunds opening today at 76.9 basis points. The yield on the 10-year BTP remains unchanged at 3.4%, while that of the German Bund drops to 2.64%, with a drop of 2.4 basis points. The French rate also fell slightly, standing at 3.42%, maintaining a gap of around 3.4 points from the Italian one.
Numbers that photograph a context of stability and trust towards Italian public debt. After years in which the differential between Italian and German securities regularly exceeded 200 basis points, the drop below 80 represents a level at historic lows.
Because a low spread is good for the Italian economy
After opening at 76.9 points, at 12 the spread further fell to 75 basis points. The continuous decline in the spread is an important signal for the Italian economy; a decreasing figure reflects a positive perception of the markets towards Italy and its financial management, in a phase in which inflation shows signs of cooling and the European Central Bank is preparing, in all likelihood, to start a cycle of interest rate cuts in 2025.
A low spread is first and foremost a thermometer of macroeconomic and political stability. It means that investors judge Italian debt to be less risky than in the past and that the country enjoys greater international credibility. In practice, the spread at historic lows is more than a simple financial indicator: it is the sign of an Italy regaining confidence and stability.
What changes for those who invest
First of all, a narrow spread fosters a climate of confidence in bond markets. Government bonds become more attractive for those looking for certain returns and limited risk, since less tension on the spread translates into lower volatility and greater predictability of earnings. Despite the general decline in yields in Europe, Italian BTPs continue to offer higher coupons than bonds from countries considered “safer” such as Germany or France, maintaining a good balance between safety and yield.
Furthermore, such a low level of spread is also positive for public finances: it reduces the state’s financing costs, allowing the Treasury to issue debt at more favorable conditions. This effect spreads to the entire economy, with less interest to be paid and more resources available for public investments, business incentives and measures to support growth.
For those aiming for safe and sustainable investments in the medium term, BTPs today remain a strategic choice, capable of combining yield, security and growth prospects.
What the ECB says
According to analysts, the current phase could represent an interesting window for investors. If the ECB were to actually lower rates in the coming months, the securities purchased today could gain value, offering a double advantage: that of periodic coupons and that of capital gains linked to the rise in prices on the secondary market.
