New step forward for BTPs, which yesterday recorded a significant reduction in the spread compared to the Bund, further reducing the distance in terms of returns. The decline has not stopped and the spread between the Italian and German ten-year bonds has fallen below the threshold of 106 points, a level that has not been seen for over three years. According to Deutsche Bank analysts, it cannot be ruled out that we could reach 100 before Christmas. The explanation is truly unprecedented. At the moment Italy is considered a very politically stable country. A safe haven sheltered from the storms crossing Europe, starting with France and Germany whose governments have resigned. A truly backward world considering the bad reputation that has accompanied national politics for eighty years. Thus the interest of investors has turned to Spain and Italy: the Madrid stock exchange has gained 20% since the beginning of the year and Milan 18%. The data also marks a positive trend for Piazza Affari, which recorded an increase of more than half a percentage point, obtaining the seventh consecutive increase. A significant result, especially considering that economic growth in Italy seems to be almost at a standstill: in the summer quarter the GDP remained unchanged compared to the previous one, and Istat forecasts only a modest +0.5% in 2024. Giorgetti rejoices. The BTP spread – Bund fell by as much as 10 basis points in a single day, reaching the lowest levels since 2021. The decline is influenced above all by the wait for the ECB meeting on the 12th December, with a consensus predicting a possible new rate cut. The yield on the ten-year BTP fell to 3.19%, the lowest value since 2022. The Minister of Economy Giancarlo Giorgetti commented enthusiastically: «At the beginning of the year, I had bet on a spread of 110, l ‘only 110 that I like! Let’s continue like this, it’s the right path”, ironically referring to Superbonus 110, one of the measures most criticized by the government. France and Germany in difficulty. The decline in the spread is also linked to growing economic uncertainty in France and Germany. In France, the worsening of the political crisis with the fall of the Barnier government has put economic stability under pressure, while German industrial production recorded a worrying -1% in October, well below expectations. The German recession and the prospect of an easing of fiscal policy with the arrival of the new government in Germany have pushed investors to prefer Italian securities, with growing skepticism towards German economic solidity. Italy becomes virtuous: the challenge between BTP and OATAccording to Giuseppe Sersale, strategist at Anthilia Capital Partners, Italy had several favorable factors in the fourth quarter. The stable rating, moderate growth and a debate on the budget law without particular conflicts with the EU have improved investors’ perception. Furthermore, the focus of the crisis has shifted from our economy to the French one, contributing to making Italy appear more “virtuous”. In the comparison between Italy and France, Equita highlights how the political and fiscal situation in France is becoming more complicated, with the government engaged in difficult budget negotiations and general elections scheduled for July 2025. France is also facing a growing public deficit, while Italy is targeting debt reduction by 2026. In terms of debt-to-GDP ratio , Italy expects the peak to be reached in 2026, while France is destined to see an increase in debt up to 116.5% in 2027. Despite a greater weight of institutional investors on French government bonds, the differential between two countries could continue to decline, with Italy moving ever closer to Germany’s levels of stability.Positive future for BTPsThe combination of a favorable political and economic context in Italy and the difficulties in the main European economies, such as France and Germany, has allowed BTPs to consolidate their position, with the prospect that the yield differential will continue to decline in the near future. The key to this success appears to lie in Italy’s ability to maintain a relatively stable profile, with attention paid to debt sustainability and fiscal policy
