Moody's downgrade still weighs on the Italian spread, which remains at high altitude despite the positive outcome of the last Btp auction. After closing yesterday at 466, opening this morning the yield differential between our ten-year government bonds and the corresponding German Bunds shot up above the ceiling of 480 basis points, reaching a peak of 485. In the following minutes, however, a strange ups and downs began: while awaiting the placement of the Treasury, the spread returned to below 470, then, despite the auction going well, it rose again to around 480. The new spread indicates that the interest rates on Italian ten-year bonds hover around the psychological threshold of 6%.
The new climate of tension is mainly linked to Moody's decision, which during the night cut its rating on Italian government bonds by two notches, taking it from A3 to Baa2, with a still negative outlook.
However, the agency's concerns were not reflected in theBtp auction this morning. The Treasury sold securities maturing in July 2015 for a total of 3,5 billion, the maximum pre-set amount, and rates fell to 4,65% from 5,30% in the last placement in June. The positive answer, which seems to ignore the spread, confirms that the buyers at the auctions are now practically only domestic.
However, the volatility of the differential can also be explained by other factors. Last but not least, the declarations arrived yesterday by Vittorio Grilli: the new economy minister admitted that Italy will have to find another 6 billion euros to definitively avoid the VAT increase in 2013.
However, the political fact is perhaps the most decisive for understanding the uncertainty of the markets regarding the situation in our country. The announcement that Silvio Berlusconi will run again for the premiership in the 2013 elections has cast a shadow on the stability of the Monti government between now and the end of the mandate. In the electoral campaign, twists and turns by the Knight cannot be ruled out, including an attempt to renew the alliance with the League by riding some form of anti-euro propaganda. Not to mention what could happen after the elections.
On the other hand, as he recalled two days ago the governor of Bank of Italy Ignazio Visco, “the difference between the yields of Italian and German government bonds is far greater than would be justified by the fundamentals of our economy. It reflects general fears of the breakup of the monetary union: a remote hypothesis, which is however influencing the choices of international investors”.
