ECB, extraordinary meeting to take stock of the markets.  Anti-spread measures on the table

MILAN – Extraordinary meeting by the central bankers of the ECB to take stock “on the situation of the markets”, officially says a spokesman. At the Eurotower there is therefore the need to understand why the reaction of the price lists and especially of the spreads was so vehement, after the announcement last Thursday of the end of the extraordinary purchases of securities (for the end of June) and the indication of a first rate hike from 0.25% for the meeting at the end of July.

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It was not unexpected news from investors, but rather the focus was on the “hawkish” signals that came from the conference. Christine Lagarde. First, the possibility that the cost of money could rise by as much as 0.5% in September if the inflation scenario does not improve. And secondly on the lack of precise indications for an anti-spread plan that some press rumors gave in the launch pad. Factors that led to the Italian ten-year yield, which at the end of 2021 was hovering around 1%, up to over 4% with the differential with respect to the German Bund which widened to over 250 basis points. And, not surprisingly, after the announcement of the meeting, the spread fell sharply.

On the willingness to dispatch anti-spread forces, the member of the council already yesterday Isabel Schnabel intervened and – as anticipated Republic – gave indications that there is no operational plan to defend the yields of peripheral countries. But he strongly emphasized that the ECB is closely monitoring the spread situation and is ready both to use the reinvestments of the pandemic program and to deploy a new instrument that could have, compared to Draghi’s old OMT, “different conditions, duration and safeguards to be fully within our mandate “.

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The convening of the meeting has sparked investors’ hopes that it will move to a real operational phase. But according to the rumors of the morning, it is not taken for granted that from today’s meeting of the “ad-hoc” Governing Council (which will take place via videoconference) the announcement of new measures will arrive: the first need of the governors would be to discuss a common line on which measures adopt in the event that indicators such as bond spreads reach the warning threshold.

He spoke about the spread and situation of Italy Carlo Messina, the number one of Intesa Sanpaolo, to the Young Factor: “I can confirm that Italy has very solid foundations. The fundamentals are solid and therefore don’t panic. The spread can be 100-150 basis points, not what we see today, “she said.

Fed could hit rates of 0.75%

In the busy agenda of central banks, before the unexpected news of the ECB, all the lights were on the American Federal Reserve. According to analysts, this will announce a sharp rise in rates today: a 50 basis point adjustment is discounted, but in recent days bets have increased to 75 basis points: this would be the largest increase since 1994 and the markets already predict that the rates will reach 3.75-4.0% by the end of the year.

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