Thursday , September 24 2020

Is the spread between BTp and Bund? Here are the three reasons for the turnaround


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Not just politics: behind the spread of the spread, there are two good news that have become boomerangs for BTP.

of Moria Longo

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3 & # 39; reading

And yet it moves. It seemed like a forgotten problem, past water. But the spread between the BTP and the Bund is coming back to speak: from the lowest touchdowns in mid-September to 132 basis points, on Wednesday the 13th at risky thermometer Italy has actually returned to exceed 165 points by Reuters and 154 by Bloomberg ( the difference is due to the fact that on October 7, Reuters began calculating the spread of the new 10-year BTP). And also the BTP auctions on Wednesday 13, with yields higher than a month ago, confirm that Italy's risk has begun to rise again. There are three reasons: one related to Italian policy, one due to Germany's opening of the only guarantee for bank deposits, one possibly related to a technique introduced by the ECB.


The weight of politics

If expansion has fallen sharply with the formation of the new government count, now that the government seems weaker, the pressure on our GDP is increasing. This is not because Conte Two particularly likes the market for its policies. The reason is another: the government of Conte Two has completely abandoned rhetoric without the euro. This is enough to reassure investors, terrified by the idea that the BTP they bought in euros could one day turn into a devalued lira. This is why the weakness of the government tends to spread: because in the event of early elections it is clear that the center-right will win the Northern League. And the League is still considered a non-party.

Maybe wrong. Citigroup's November 11th report notes that Salvini, in answering "why not?" On Mario Draghi's hypothesis as president of the Republic, helped to release the image of a non-euro party. But equally the market remains dreadful. Citigroup itself believes that risk is underestimated in markets. It is no coincidence that the spread on October 28, the day after the Umbrian Election Center super-victory. And with the same perspective, consider the case of Ilva: because it weakens the government.

The German proposal

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