The perspective of one peace in the Middle East It also brings beneficial effects on bond markets: the sharp drop in the price of Petroleum in fact it eases concerns about overheating of theinflation and then decreases also the possibility of monetary squeezes: a perfect cocktail that brings in government bond yields fall a bit all over the world.
Central banks less concerned about inflation: the Fed takes center stage today
The drop in the price of Petroleum below the threshold of 80 dollars a barrel, with prospects of resumption of the offer on the markets eases concerns about a rise in'inflation and also the central banks they can relax.
Today the premiere of Kevin Warsh at the helm of the Fed, replacing Powell. Warsh was Trump's choice to cut rates. Of course, with inflation above target and employment solid, until the peace agreement, many analysts had already bet on the possibility that the Fed would raise rates. Instead, the tables have turned again, and, as is happening with central banks around the world, the falcons of monetary policies they are taking a step backInvestors generally expect the Fed to keep interest rates in the current range of 3,50% to 3,75%, but as always, the tone and detail of Warsh's statements will make the difference.
Government bond yields are falling in every corner of the world
Yields on 10-year government bonds fell during the Asian session. from Japan by 1,5 basis points to 2,63%, while those of ten-year bonds Australians Treasury yields fell nearly 5 basis points to 4,787%. US stabilized at 4,43%, down about 23 basis points from the May peak.
But also in theEurozone Government bond yields are posting modest declines, between 0,5% and 0,7%, although the recent lows to watch date back to before the start of the war in Iran at the end of February.
Il Waist German 10-year bond fell below 3% to 2,91%, while the BTP Italian government bonds stand at 3,63%, so the spread between BTPs and Bunds is around 70 basis points. Before the war, it was 55 basis points. The yield on theFrench oat is slightly higher than that of the BTP, standing at 3,66%. Spanish bonds fell to 3,34%. Yields British fell sharply below 4,8% to 4,75% after May inflation unexpectedly held at a 13-month low of 2,8%, a day before the announcement of the Bank of England of its decision on interest rates.
The intense activity on the primary market benefits from this
I governments, who have heavy needs for refinancing, they can do it more peacefully, weighing less on the cost of debtItaly is currently collecting the BTP Italia Yes, The new inflation-linked bond for the retail market offers a real interest rate (set by the Ministry of the Economy and Finance at 1,6% per year) for five years, regardless of inflation. As calculated by Unicredit analysts, this bond remains attractive compared to a fixed rate of the same duration if Italian inflation averages 1,5% over the next five years. Currently, Italian national inflation is slightly below 2,6%, according to April data. According to calculations by Skipper Informatica, the BTP Italia Sì would therefore have a gross annual yield to maturity—including the final loyalty bonus of 0,6%, or 0,12% per year—of 4,31% per year, rising to 3,77% net of taxes. At the end of the placement on Friday, the guaranteed minimum rate could be confirmed or revised upwards, depending on market conditions: which currently suggest that there will be a confirmation.
France, Spain and Germany they should place almost 30 billion euros of bonds this week, say Unicredit strategists. Activity on the primary market will be more intense in intermediate section of the yield curve and will also include inflation-linked bonds issued by Paris. Repayments by Germany (2,9% Schatz bonds maturing in June 2026) will amount to €19 billion, while coupon payments will total approximately €4 billion. Consequently, net supply is expected to be positive again this week.
