During the first minutes of the opening of the financial markets on 11 June, the spread between Italian BTPs and German Bunds increased, reaching 79 basis points, two more than yesterday. A growth caused by a parallel increase in Italian and German yields, with the BTP Benchmark at 3.87%.
The first June BOT auction ended yesterday, recording slightly lower demand compared to the latest similar issues. A signal that lowered the price of Treasury bonds and consequently significantly raised their yields.
Spread increasing between BTPs and Bunds, yields higher for weeks
The spread between Italian BTPs and German Bunds increased significantly, reaching just a few tenths of a point from 80. The differential reached 79 basis points, the highest figure since the peaks at the beginning of May. The spread had been bouncing between 77 and 78 points for days but the situation worsened in the first minutes of the morning of June 11th.
It is the consequence of a parallel increase in the yields of Italian and German government bonds, with BTPs recording greater growth than Bunds. The Italian 10-year benchmarks now yield 3.87%, which is the highest figure recorded in June and in the last 20 days. At the same time, Bund yields also grew, reaching 3.08%, but not enough to cancel out the growth in the differential.
More stable spreads in the rest of Europe
However, the differentials in the other large European countries remain substantially unchanged. The Bonos, the Spanish securities, recorded only a slight increase, bringing the spread from 44 to 45 basis points. Yields rose four hundredths of a percentage point to 3.53%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.08% | – |
| Italian BTPs | 3.87% | 79 |
| French Oats | 3.74% | 66 |
| Spanish Bonos | 3.53% | 45 |
France, on the other hand, recorded substantial stability in the spread, at 66 basis points. The yields on Oat, the 10-year government bonds of Paris, reached 3.74%.
From the BOT auction 8.5 billion, the next issues
The Bots auction ended yesterday, the first in June. The Treasury offered a 12-month bond for 8.5 billion euros. The results were good but not excellent: demand came close to 12.2 billion euros, leading to a coverage ratio of 1.43, lower than the 1.50 which is the minimum threshold for a completely positive auction. The weighted average sales price was 97.326, which resulted in a yield close to 2.7%.
The medium-long term auction will be held tomorrow, or what remains of it after the Mef has eliminated a large part of the products to replace them with a syndicated issue in the near future. The other auctions in June will be:
- Wednesday 24 June, auction of Short Term BTPs and BTP€i;
- Thursday 25 June, Bot auction;
- Friday 26 June, medium-long term auction.
