MILAN – 12:45 pm. The European markets fail to rebound and return to the red, continuing the sell-off of the stock exchanges of the last few days with the S & P500 has put together a collapse of 9% in three sessions, falling by more than 20% from the peaks of January and thus officially entering in the “bear” phase. Milan at mid-morning the day becomes heavier up to -0.9%. Saipem in evidence after an agreement with Trevi related to drilling for offshore wind farms. Even on other European squares, purchases are short-lived: Frankfurt turns 0.95% red, Paris loses 1.4% e London yields 0.93%.
The spread between BTP and Bund reverses course after the initial drop. The differential widens and exceeds the threshold of 250 basis points to 250.4 points after the BTP auction which saw interest rates rise. The 10-year yield rises to 4.146%. In fact, in the auction, the Treasury placed a total of 6 billion in bonds, with the three-year rate rising to the top since July 2012 (3.04%, up 152 basis points) and the seven-year rate which marked a record (3 , 75%, +136 points) since the maturity was introduced in 2014. Securities with maturities in 2049 and 2052 were also placed.EUR is up slightly against the dollar (+ 0.2%) to 1.0436. The single currency changes hands at 140.37 yen (+ 0.3%) while the dollar / yen is essentially stable at 134.49 (+ 0.06%).
Stock markets down, BTPs under attack, the ECB corrects its rates and prepares the anti-spread challenge
by Tonia Mastrobuoni
Basically, a climate of tension remains. Investors are concerned that central banks’ squeeze to fight inflation could bring a fatal blow to growth: this is what it testifies the inversion of the US yield curve, with two-year bonds yielding more than ten years for a few moments on Monday, representing a “risk of recession”. Morgan Stanley CEO James Gorman said he saw a danger of a US recession on the order of 50%. And Fitch cut global growth estimates by 0.6 percentage points, to 2.9% for 2022: the major revision concerns China, “where we expect growth to drop to 3.7% this year, from 4.8% % for March. The growth forecasts for the United States by 0.6 percentage points to 2.9% and for the euro zone by 0.4 percentage points to 2.6% have also been revised downwards “.
The focus is now on the Fed, who will say his rate decisions tomorrow. At the May meeting, Governor Powell had made it clear that the hikes would be 50 basis points in May and June, if macroeconomic data were confirmed as expected. But last week’s inflation (8.6% in May) beat them and now the market has raised its bet to a 75 basis point hike – it would be the strongest since 1994.
In the morning, the Tokyo Stock Exchange extended losses in the wake of US equity markets: the Nikkei fell 1.32% to 26,629.86, with a loss of nearly 400 points. On the currency front, the yen is trading near its 23-year low against the dollar, at 134.60, and also weakens against the euro at 140.40. Shanghai turns up and eventually gains 1.02%, Shenzhen 0.19%, Hong Kong slips by 0.25% while Seoul 0.58%.
Among the macro data of the day it should be noted that in May theinflation in Germany accelerated, on a trend basis, to 7.9% from 7.4% in April, in line with expectations. This was announced by the German statistical office, adding that on a monthly basis there was an acceleration to 0.9% from 0.8% in April. Also in Germany, theZew index on investor confidence stood at -28 in June, lower than expected, but up compared to May (-34 points). Estimates for June were -26.8 points.
The collapse of the Bitcoin which still loses ground after yesterday’s debacle and in Asia retreats up to 10% slipping below $ 21,000 to $ 20,824. Then the slight recovery that brought the main cryptocurrency to $ 21,899.
Among the commodities, the prices of the Petroleum they are stable on the Asian markets after yesterday’s swing. Fears that demand will be affected by a possible recession and the Covid situation in China have curbed the rises. WTI futures rose 0.14% to $ 120.8 a barrel, Brent futures rose 0.11% to $ 122.14. “The discussion revolves around the decline of production in Libya, the measures that China continues to impose to slow the spread of Covid and concerns about the global recession leading to the destruction of demand,” said Stephen Innes, of Spi Asset Management. . In China, there was a Covid outbreak in a Beijing bar that raised fears of a new lockdown phase just as restrictions began to ease and demand strengthened. Yesterday, the most populous district of the Chinese capital, Chaoyang, began a three-day mass testing campaign among its approximately 3.5 million residents.
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