Btp above 4%, how to win with a jump in returns (but diversify the risks) – Corriere.it

relatively quickly, The ten-year BTP yield has reached interesting values ​​for those who have assets and wish, at least in part, to invest in them.. The BTP rate on Monday, June 13th actually crossed the 4% threshold and closed at 4.1%, at levels not seen since December 2013.
The first thought goes to the risk one assumes, by allocating a portion of his capital to financial instruments, such as shares or, in this case, bonds, in the form of Italian Treasuries. Not so long ago, it was assumed that the 3.75-4.00% return level of a 10-year BTP plan could be the first step to investing a portion of the cash. The path, up to that point, was gradual. In the sense that the prices of medium and long-term government bonds have fallen thanks to the market demand for higher returns, but in a limited way.

acceleration

In recent trading sessions, the unexpected acceleration has meant the rally in yields has become more realistic. On May 28, the decimal issue yielded 2.89%. In the subsequent five sessions, the 3% return threshold was largely exceeded, settling just under 4%. The ECB President’s press conference presents a rather complicated situation, with inflation rising to 8.1% in May. The main weapon available to the ECB, like other central banks, is the credit crunch, by increasing the reference rate. From July 21, with a significant follow-up in the following months, from September onwards, the rise will stop slightly. But Frankfurt will have to monitor the large number of government issuers, some of which have high aggregate debt. The second reason for the increase in yields may be due to the approach of the fifteenth of this month, when the Federal Reserve will raise the reference rate for the third time this year.

Fed Options

The positive trend in consumption and the large number of workers finding jobs means that in order to reduce inflation dynamics, the US central bank may be urged to implement a higher-than-expected monetary tightening. With that in mind, Financial markets anticipate the likely decision by demanding a gradual increase in the yield level across all maturities of government bonds. Especially the most common term, which is ten years.

diversification

In the wake of these mechanisms, if the ten-year BTP yields between 4.25 and 4.50%, it may be time to set aside a portion of the assets for a ten-year issue. beside that , To keep the overall asset risk at medium levels, set maturities of two and three yearswhich yields close to 2%. Invest, at the moment, a maximum of 7.5% of the portion allocated to bonds in these three maturitiesIt could be the start of a two-sided wallet policy.

Compare with procedures

On the other hand, the bedrock of accumulation as prices continue to fall, if market returns rise further. On the other hand, the potential capital gain, if, on the other hand, future returns should fall, if, at the beginning of July, the reporting of the change in the gross product of the United States in the second quarter of this year continues to provide negative data. The eloquent graph: EU 10-years offer a minimum pre-tax return of 1.44% in Berlin, and the ratio rises to 3.64% in Rome. We can see the significant increase in yields that characterizes BTP, starting on May 30th. A month ago it was 2.85%. by more than 27%. which indicates how much Longer bonds may, at certain points, present risks – and the greatest number of investment opportunities – comparable to those of stocks.

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