ROME – The markets are sounding the alarm clock for the “strongest government in Europe”, copyright by Giorgia Meloni. It gets inflamed the spreadwhich reaches the psychological threshold of 150 basis points, and then closes at 144. The Italian 10-year yield jumps to 4.16%, at the highest since December. The stock market falls: Milan is in the black, with the Ftse Mib index contracting by 1.93%. While the prime minister celebrates her home success in the European elections, the message coming from investors goes in the opposite direction: Italy is vulnerable. As demonstrated by the bets of hedge funds that have bet 50 billion against Italy.
As in a sort of retaliation for the advantage acquired on a political level, Emmanuel Macron’s fall becomes a problem for the prime minister when the lens shifts to the effects that the “earthquake” in the French polls is having on the markets. Yesterday French bond yields soared to 3.33%generating a domino effect that mainly affected Rome.
France, the leader of the Republicans Ciotti confirms the turning point in view of the elections: “We need the alliance with Le Pen”
by our correspondent Anais Ginori
June 11, 2024
It is a dynamic that promptly returns when signs of instability emerge: those who pay the bill the most are the countries with bad public finances. But the tensions over Italian debt do not end here. Christine Lagarde’s latest statements dampen the government’s enthusiasm for a possible close repeat of the rate cut decided last Thursday. “Growth prospects have improved, but it does not mean that interest rates are on a linear downward path,” remarked the president of the European Central Bank.
A consideration which – Equita highlights – leads us to think that “in the current market context, the ECB can opt to maintain relatively high rates for some time, thus giving support to market expectations which expect less than two further cuts in rates during 2024”. The effect is clear: the growth forecasts for interest expenditure will become stronger.
Melons strengthened by the vote. But between debt and the Stability Pact there are 50 billion reasons not to celebrate
by Maurizio Ricci
June 11, 2024
Faced with a scenario that is becoming gloomy, Brothers of Italy attacks the ECB. “We don’t understand why Italy, even more than other countries, must be penalized by this continued persistence of rates, which instead must fall even more than what was decided a few days ago,” they explain from the Prime Minister’s party. Words that exude nervousness and difficulty also in view of the commitments on the accounts that the government will have to line up in the medium-term fiscal-structural plan.
A milder message is leaking from the Treasury: the flare-up of the spread is framed in a “normal oscillation that is affected by the outcome of the vote in some countries”. But the contagion, in the meantime, is running fast.
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