The spread between Italian BTPs and German Bunds fell for the third day in a row at the opening of March 18th. The differential reached 74 basis points compared to 78 the previous day, thanks to a very pronounced reduction in the yield of 10-year Italian benchmark government bonds, of almost a tenth of a percentage point in one day.
The Italian spread continues to return to levels prior to the peak caused by the war in Iran. A recovery both on German bonds and on Spanish and French ones, whose yields are falling but not at the pace that BTPs are imposing at this stage.
Btp-Bund spread at 74 points, recovery continues after the peak
At the beginning of the week, the spread between Italian BTPs and German Bunds began to fall regularly. On Friday the 13th it had reached a peak of 84 points, but already on Monday the government bonds had demonstrated the possibility of recovering from this figure, anomalous both for the recent past and for the comparison with the other large European countries.
On Wednesday 18 March the differential returned to 74 points, recovering the increases of a week. It is the result of a reduction of almost a tenth of a point in yields, which went from 3.72% to 3.63% in one day. A drop that was significantly higher than that, however substantial, recorded by German Bunds, which fell below 2.90%, to 2.89%.
Italian government bonds often tend to be more unstable on the financial markets in times of crisis, such as the one we are experiencing, due to the war in the Middle East. The reasons for the latest fluctuations are both structural, the high public debt, and contingent.
Among the latter are our country’s great exposure to gas as a source of energy, the negative growth data that could compromise the immediate exit from the infringement procedure for excessive debt and finally also the political instability that the result of the referendum could bring.
Spain and France are not keeping up with Italy
Spanish Bonos also recorded a decline in the spread on German Bunds, but by only two basis points compared to the Italian four. Madrid reduced its spread to 47 points, bringing yields to 3.36%.
| Government bonds | Returns | Spreads |
| German Bunds | 2.89% | – |
| Italian BTPs | 3.63% | 74 |
| French Oats | 3.53% | 64 |
| Spanish bonos | 3.36% | 47 |
France is also maintaining the same trajectory. Ten-year OATs now yield 3.53%, a tenth less than BTPs, with a spread of 64 basis points.
The next BTP and BOT auctions
Although the spread is decreasing, demonstrating the financial markets’ confidence in our country and its ability to repay public debt, BTP yields remain relatively high. Investors will be able to take advantage of this advantage in upcoming auctions. The dates to note are:
- on March 25th for the auction of BTP Short-BTP€i;
- March 26 for the Bots auction;
- March 27 for the auction of medium-long term BTPs;
- on April 9th for the Bot auction;
- on April 10th for the auction of medium-long term BTPs.
