The spread between Italian BTPs and German Bunds decreased by three basis points in one day. Compared to the last opening, in the first minutes of activity of the financial markets on 12 June, the differential went from 79 to 76 basis points, with the yields of the 10-year benchmark BTPs falling to 3.75%, after having come close to 3.90%.
A decline determined above all by Donald Trump’s announcements. The US president claims that the war in Iran is “over” and that Tehran has given up its nuclear program. Iranian sources have already denied what Trump declared, but the markets are still reacting well.
Spreads falling due to Trump ads
The sudden decline in the spread between BTPs and Bunds was determined by Donald Trump’s announcements. The president of the United States claims that the war in Iran is over and that an agreement has been found and is about to be signed. Tehran has denied this, but this does not seem to have a particular impact on the markets.
The differential decreased, returning to the levels of early June, thanks in particular to a collapse of 12 hundredths of a percentage point in the yields of 10-year benchmark BTPs. The Bunds instead reduced their coupons by just 9 cents, generating the difference that led to the reduction in the spread. However, compared to before the start of the war, the differential still remains high. Over the past six months it has risen 10%, up 16.5% since the start of 2026.
Spreads falling across Europe
The drop in yields is even more significant if we consider that, yesterday, the ECB announced an increase in interest rates on deposits of 0.25%, the first in three years. The change will only come into force next week, but this is still negative news for the markets, which will reduce investments and slow down the economy.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 2.99% | – |
| Italian BTPs | 3.75% | 76 |
| French Oats | 3.63% | 64 |
| Spanish Bonos | 3.42% | 43 |
Despite this, the yields and spreads of the main European countries followed the trajectory of the Italian ones. The Spanish Bonos reached a spread of 43 points, with yields at 3.42%, while the French Oats reached 64 points away from the Bunds, with yields at 3.63%.
12.5 billion euros from the BOT and BTP auctions
The auction of 3-year BTPs ended yesterday, completing the first round of June government bond issues. 4 billion euros were raised which, added to the 8.5 billion raised yesterday by the 12-month Bots, bring the total to 12.5 billion. The BTPs obtained a gross yield of 3.03%, with a very high price, at 99.96, given by sustained demand, with a coverage ratio of 1.62.
The next 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.
