The spread continues its inexorable surge. After opening at 324 basis points, the spread between Italian 330-year bonds broke through 335 basis points in just a few minutes, even reaching XNUMX points.
The yield curve was also negative, rising from 3,59% at yesterday's close to today's high of 3,65%. At the end of the day, the differential closes at 326.8 and the yield at 3,619%.
The probable rejection that the European Commission will reserve for the Italian maneuver tomorrow, November 21, with the consequent launch of an infringement procedure, continues to worry the markets which wonder about the future of the Italian economy and heavily "punish" Italian bonds. “Obviously I'm worried”, commented the Minister of Economy, Giovanni Tria, leaving the Chamber. Hard Luigi Di Maio who never misses an opportunity to blame Brussels: “the fact that the European Union is acting as a rubber wall towards Italy is being paid for. But it is not a battle between Brussels and the Italian government,” Di Maio told the microphones of Radio Me too, on Rai Radiouno. “We want to bring home measures such as the 100 quota and basic income. And if the EU line is 'let's make the Italians pay', I can only go on. We are moving forward together and the Italians are with us”.
Returning to the numbers, it is not only the widening of the spread with the German bund that causes a stir, but also that with the other countries of the Eurozone. If in fact the German economy now seems to be light years away from the Italian one, to date even traditional “competitors” like Spain and Portugal leave us behind, widening that gap that until recently was in our favour.
The Spanish bonos distance us by 200 basis points, level never reached even during the 2011 crisis, when the spread reached 575 points on the bund, while the spread between the btp and the Portuguese Ot is 165 points. On the other hand, it should be emphasized that the differential with Greece is equal to 102 basis points, three times less than that with Germany. We are officially closer to Athens than to Berlin.
Uncertainty about our country also affects other Italian government bonds. An example above all is the BTP Italy, Government bond indexed to inflation designed precisely to channel the savings of Italians towards our bonds. Since 2012, the year of his birth, he had never missed a shot. But the news of the last few days tells us something very different: on the first day of issue, the Btp Italia collected subscriptions for 481 million euros, a figure that represents a third of what the MEF had collected in the previous issue (May 2018), when at the end of the first day of the offer of the bond expiring in May 2026 it had collected subscriptions for 2,3 billion.
The negative trend also continued on the second day of issue. At the end of the day, funding amounted to 240 million euro against 930 contracts entered into. In last May's issues, on the second day alone, retail requests exceeded 1,4 billion euros. In the first two days, funding reached 720 million compared to the total 3,7 billion collected in May 2018.
The sell-off on government bonds then affects the share, with the Ftse Italia Banks which yields 2,61% against 1,87% of the Ftse Mib. The big names are in deep red: -5,42% for Banco Bpm, -2,81% for Unicredit, -2,46% for Intesa Sanpaolo.
“The increase in spreads on Italian government bonds is having effects on banks not only directly due to the impact on capital in relation to the bonds that are in the 'trading book' for sale but also due to the sensitivity of funding costs: this is particularly important and I think supervisors need to place a major focus on banks' funding plans to make sure they are robust in an adverse economic environment." The said it Eba president Andrea Enria in the hearing in the European Parliament for his appointment as head of ECB banking supervision.
Among other things, the rise in the spread, for the first time, also affects the bank rates relating to new loans to households and businesses. The Abi reports it in the monthly report. The average rate on new home purchase transactions, according to the association's estimates, rose to 1,87% in October from 1,80% in September, while the average rate on new business loans increased throughout '1,6% from 1,45% reported in September. “For now it's just a change of direction” comments Gianfranco Torriero, ABI's deputy director general, according to whom there is no sudden recovery and the coming months will tell if there is a definitive change of course.
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(Last update: 18.07 am on 20 November).
