Even during the first minutes after the opening of the European financial markets on 5 August 2026, the spread between Italian BTPs and German Bunds reduced significantly, reaching 77 basis points, one of the lowest levels since mid-July. Yields also fell nearly a tenth of a percentage point from 24 hours earlier.
This confidence of the financial markets in Italy depends on the evolution of the situation in the Middle East. Iran is negotiating with Oman for a new agreement to further open the Strait of Hormuz. The US is pushing for a total opening of the passage.
The spread is continuing to fall, but the news is on the returns
The decline in the spread continued on August 5th too, with a very significant difference compared to recent days. It was not only the spread that fell, to its lowest level since mid-July, but also the yields. The hopes of a solution to the conflict in the Middle East, which are also causing the price of oil to fall, also have a calming effect on the interests of government bonds.
The decline in the spread and, above all, in returns
The reduction in the spread has brought the spread back to levels prior to the latest escalation in the Middle East. 77 basis points are close to the 75 which for weeks had been the reference for benchmark ten-year BTPs. A sign of greater stability of the Italian public debt, on the eve of the communications of the Minister of Economy Giorgetti on the safeguard clauses in the Chamber.
However, it is the returns that have made the difference compared to recent days. The decline in the spread was accompanied by a relative stability of interest on BTPs, which had fallen at a pace only slightly faster than that of German Bunds. Italian securities moved away significantly from 3.90%, reaching 3.86%. At the same time, Bunds managed to fall below 3.10%.
In Europe, Spain is stable, the decline in the French spread continues
However, the spread between Spanish Bonos and German Bunds remains stable. Even in this case, however, there is a significant reduction in yields, parallel to that of Berlin bonds.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.09% | – |
| Italian BTPs | 3.86% | 77 |
| French Oats | 3.87% | 78 |
| Spanish bonos | 3.52% | 43 |
However, the spread on French bonds continues to decline. 10-year OATs now record a spread of 78 basis points, with yields falling at a similar pace to Italian yields.
The next government bond auctions in August
After the conclusion of the July government bond auctions, in which the Treasury raised billions of euros at relatively high yields due to international instability, we will have to wait until the second week of August to see other BTP and BOT issues.
The dates to note are:
- August 12, Bot auction;
- 13 August, auction of medium and long-term bonds;
- 26 August, auction of Short Term BTPs and BTP€i;
- August 27, Bot auction;
- August 28, auction of medium and long-term bonds.
