BTPs: Contagion from France sends the spread against the Bund soaring to 118 basis points at the close
Ten-year yield hits its highest level since October 2023 at 4.69 per cent
(Il Sole 24 Ore Radiocor) - Spreads and yields are soaring for Italian government bonds, which are bearing the brunt of a very pronounced ‘flight to quality’ on the bond market. Tensions on global energy markets and ‘contagion’ from French government bonds (now perceived by traders as riskier than their Italian counterparts) have fuelled buying flows towards German Bunds, which today gained ground at the expense of bonds from peripheral Eurozone countries. At the close of trading, the yield spread between the benchmark 10-year BTp and the German bond of the same maturity stood at 118 basis points, up by as much as 16 basis points from the previous session’s 102 basis points, reaching its highest level since April 2025. The yield on the benchmark 10-year BTp also rose to 4.69 per cent, up from 4.62 per cent at the previous day’s close, reaching levels not seen since October 2023. The yield on the German Bund closed lower at 3.52 per cent (3.63 per cent yesterday), whilst the French 10-year OAT ended at 4.92 per cent, still at its highest level in 18 years and with a spread of 140 basis points over the German Bund. The US bond market remains under pressure, with the 10-year T-bond fluctuating today around 5.34 per cent, its highest level since 2002.
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