BTPs Cheaper Across The Curve, Spreads Widen A Little Into ECB

Early ECB day price action sees most of the major peripheral EGB curves following the twist steepening pattern observed on the German curve, although Italy is the most meaningful exception, with cheapening seen across all major BTP benchmarks. That could be a case of jitters surrounding next month’s TLTRO repayments from Italian banks becoming evident ahead of today’s ECB decision (more on that later). Performance is more mixed on the Greek curve.

• The 10-Year BTP/Bund spread is a couple of bp wider on the day, within the recently observed range, while the 2-Year BTP/Bund spread operates around levels seen at the time of the ECB’s March gathering, representing multi-week wides.
• Elsewhere, the 10-Year SPGB/Bund spread hovers around multi-week wides, also at levels not seen since around the time of the March ECB meeting (albeit comfortably shy of the wides seen around that time), while the 10-Year OAT/Bund spread is just shy of this week’s multi-month wides.