February 5, 2023

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10 years of BTPs and postal notes after the ECB decision

There is no good news for Italy after the monetary policy decisions taken by the European Central Bank. In fact, the market is starting to think again Italian debt is risky, even more so than the Greek. the 10 year BTPs So it rose to 4.33%, up nearly 20 basis points.

Meanwhile, Defense Minister Crocito spoke out against the European Central Bank’s decision to raise interest rates and QT tightening quantification Starting next March. The latter term refers to a process of reducing the purchased assets (company and state debts put on the market). This means that the ECB does not reinvest in the bonds it owns that have reached maturity or sell the bonds it holds.

The official document of the December 15th meeting states that starting next March, the portfolio of the asset purchase program will decrease. The reason is that the euro system will not reinvest principal payments from outstanding securities.

What does this mean? Every government would have to rely solely on the market to sell bonds. Therefore, as demand decreases, government bond prices fall and the yield or interest paid by the debt issuer increases.

to me Postal bonds Are there any repercussions after the ECB rate hike?

BTP, rates up to 4.33%

After advertising aside European Central Bank Due to the increase in interest rates, spreads and rates on BTPs increased, surpassing even Greece’s yields and the 10-year yields reached the 4.3% threshold.

An increase in the cost of funds was to be expected, but not Lagarde’s remarks.

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Fabio Rampelli di Fratelli d’Italia believes that the latter can have devastating effects, as can also be seen from the increased proliferation and collapse of stock exchanges. In addition, he made it clear that he considers the announcement related to stopping the purchase of government bonds to be inconsistent and suspicious.

Lagarde said, a few days ago, “YesLet’s hope Italy quickly endorses Mies’ reformHe added that our country is an integral part of completing the banking union. But for Rampelli, Italy in this way will demand that Italy agree to the policy of microfinance at any cost, otherwise “Will these consequences be the way Greece was punished years ago?“.

What about postal savings bonds?

One wonders if the rates Postal savings, as well as those for 10-year BTPs, jumped above the 4.3% threshold after the ECB’s announcement. The answer is no, because these securities are not affected by market fluctuations. In fact, they have a fixed rate that grows over time and can only be modified by decree, however, rarely.

In the meantime, BFPs are and remain one of the preferred investment vehicles for Italians, because they have no subscription costs, except for tax accrual fees, and then because they are subject to a preferential 12.50% tax on interest. It is also exempt from stamp duty.

Among the best right now is the 4-Year Simple Savings which lasts for four years and offers the flexibility to repay at any time. However, it can only be subscribed to if a simple savings plan is activated. With them the actual annual total return is obtained at the end of each year period, standard 1.50% while bonus 2.50%.

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