SAMT Blog
Spread BTP-BUND in a new normal
10. June 2019, by Mario V. Guffanti
Technical Analysis
In this last period, the BTP-BUND spread has been reported several times in economic newspapers each time the indicator was around 280. In fact, the 280 level is a historical level of support and resistance, which is the reason why the indicator is often found around that number. As we can see from the long-term chart that also includes the Italian crisis of 2011, the area 240-280, can be considered as a zone of attention from which the indicator, if it suddenly exceeds 280, could go to higher levels very quickly indicating a scenario of strong crisis for the Italian debt.
A month ago, I wrote an article about the fact that the BTP-BUND spread was behaving abnormally compared to the past. Since the half of March 2019, the volatility of the pattern had completely changed: while in 2012 and 2018 all indicators moved upwards very quickly and with high volatility (Spikes), this time for the Spread the movement was slower but progressive and contained in a bullish channel (see in the next chart BOX 1 from the vertical blue line).
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