how to earn with the Btp waiting for the rate to rise – Corriere.it

From 2.33% of the 10-year German bund to 5.85% of the Romanian one. This is the group photo of long yields in the EU. Meanwhile, two debates enliven the markets. The first is international: is the rise in central bank rates over? The other concerns our country and its public debt. There is a return to the times of Bot people, especially after the recent success of the Btp Valore. The strong link between private investors and institutional investors and Italian government issues not only does not yield to the pace of the times, but seems to gradually strengthen. This is perhaps due to the lower presence across the border at the auctions that the Treasury Department offers on a monthly basis. Looking back on Treasury placements last April, an offer of BTP Green maturing on 30 October 2031 attracted total requests for almost 53 billion euros, 52.885 billion the exact amount requested. All from Italy? Very unlikely, the figure is yet another proof that our country’s government instruments attract investors from all over the planet. While awaiting the opinion of a rating agency, expected shortly after mid-May, the average level of yields on government issues, not only Italian ones, rises moderately.

Waiting for central bank decisions

Yields are also uncertain about the decisions that the US Central Bank, the Bank of England and the European Central Bank will communicate between 14 and 22 June next. In this context, most financial analysts and market experts believe that, at the moment, the levels at which the aforementioned reference rates stand will not rise further. Well, most of it. quite rational to hypothesize instead that the bullish phase is not over, but appears less aggressive, limiting further increments to a quarter point. To verify what the effects could be on the inflation dynamics, without producing excessive reductions in value, both to equity and bond instruments. If this strategy is confirmed, even the yields of fixed coupon bonds, most of those present in the financial markets, could follow. At the same time increasing the aforementioned yields, to the detriment of quotations, which could slowly decrease.

The strategy

New opportunity, in this case, to accompany, gradually and taking into account the available liquidity, and which could be reserved for medium-term investments, to invest in ten-year BTPs or, if already present in the portfolio, to increase the nominal value. The ten-year duration could clash with the medium-term investment. And indeed a fair consideration. In reality, the strategy to be implemented would not be exclusively to maintain the instrument until its natural expiry, which, if desired, could also represent an alternative strategic choice, but to access the market in eighteen or twenty-four months, in the light of a return of yields to gradually lower levels, selling it at a market value almost certainly higher than the current one. Realizing a decent capital gain. Although reported several times, it is worth mentioning the positive effect that, in the event of a drop in market yields, is created for an instrument with a ten-year duration. The quotation would rise by about eight points. In this case, it would be a slightly smaller increase, because, in the meantime, the duration would have decreased to about eight or nine years.