Swing in the Italian Stock Market. Spread Btp-Bund meaning
The voice on the fears of today's auction Bot (1 year expire) with a demand much less than the supply, and therefore the possibility can not be covering maturing bonds with newly issued bonds, this morning has forced the Milan Stock Exchange to open largely negative (minimum -4.84% at 10.00). The auction has instead allowed the placement of all registered users (equal to 6.75 billion euros), however, at a rate equal to 3.67% , with a substantial rise than last auction.
Since then the stock market began to rise, driven by buying bank stocks (Unicredit +5.89%, +5.52% UBI Banca), finishing the day with a +1.18%, in contrast with the negative results of other European stocks.
Similarly the performance of the differential BTP-Bund, came to touch the 347 basis points, remaining at 310.
But what shows the differential BTP-Bund?
The spread between the BTP (Italian government bond fixed rate, here we are referring to ten years)
and the Bund (German government bond ) expands ( as is happening these days) when the BTP yields increased compared to those of the Bund . The yield of a bond (and the Btp is a bond issued by the Italian State) increase when you cut prices, and prices fall when sales (as with any good) are higher than purchases. Since bond yields reflect the risk premium which is run by buying the title, the increase in the spread indicates an increased risk in buying Btp instead of German Bund, is therefore the premium paid to the subscriber-purchaser BTP's why you bought that title.
Since then the stock market began to rise, driven by buying bank stocks (Unicredit +5.89%, +5.52% UBI Banca), finishing the day with a +1.18%, in contrast with the negative results of other European stocks.
Similarly the performance of the differential BTP-Bund, came to touch the 347 basis points, remaining at 310.
But what shows the differential BTP-Bund?
The spread between the BTP (Italian government bond fixed rate, here we are referring to ten years)
and the Bund (German government bond ) expands ( as is happening these days) when the BTP yields increased compared to those of the Bund . The yield of a bond (and the Btp is a bond issued by the Italian State) increase when you cut prices, and prices fall when sales (as with any good) are higher than purchases. Since bond yields reflect the risk premium which is run by buying the title, the increase in the spread indicates an increased risk in buying Btp instead of German Bund, is therefore the premium paid to the subscriber-purchaser BTP's why you bought that title.
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