On the same day as the ECB meeting, Italy is preparing the issuance of medium / long-term BTPs for a maximum of € 7.75 billion. In detail, the Treasury announced the placement of 3-year BTPs on Thursday 10 June (maturity April 2024) for a minimum of 3 billion and a maximum of 3.5 billion. 7-year BTPs (maturity July 2028) for 2-2.5 billion euro are also on offer. Finally, a less substantial issue of 1.25-1.75 billion for the 20-year BTP (March 2041).
“We expect demand to be solid as BTPs continue to offer the highest yield in the euro area,” remarks Althea Spinozzi, Saxo’s Fixed Income Strategist. “It is important not to forget that European government bonds continue to be closely related to US Treasuries. Therefore, if we see yields rising in the US, the ECB’s dovish message could be useless to keep yields in check, ”the expert adds ahead of Thursday’s ECB meeting. Saxo expects the ECB to keep monetary policy unchanged with bond purchases. “It is premature to talk about tapering in the euro area as the economy is just opening up after a long period of blockade – remarks Althea Spinozzi – Not only that, but the ECB will be reluctant to withdraw support at a time when bond purchases will naturally slow as the primary market goes on summer vacation. Demand for European government bonds, especially Bunds, has recently been weak, making any type of tapering impractical ”.