“This year it's really difficult not to make your money work.” A provocation from Wall Street Journal which highlights how, after years of disappointments, investors have been able to count on best conditions ever thanks to favorable factors “in every corner of the markets”. A situation that made all sorts of things possible rally: stocks, bonds, gold but also cryptocurrencies. “Those who relied on the traditional formula (i.e. 60 percent in bonds, 40 in shares) take home a rich 17 percent this year. It is with these credentials that Toro is embarking on a rich New Year's Eve rally.
Bonds: yields at their lowest levels for several months
The trend in fixed income is once again driving the upward trend, especially on the Italian stock exchange. The Italian bond market recorded this morning a drop in the 3,50-year yield below 2022%, levels not seen since August XNUMX. This comes against a backdrop in which the eurozone is targeting interest rate cuts for next year, while poor liquidity amplifies market movements.
At the end of the morning it spread on the ten-year Bund it stands at around 155 basis points, the same level as the last closing, the lowest since June, light years away from the peaks (550/600) reached at the most acute moment of the Greek crisis, when the rules was the inflexible Wolfgang Schauble. Today, across the eurozone, yields have reached lows for several months, with the market focusing on the prospect of interest rate cuts within a few sessions of the end of the year. Investors are currently pricing in interest rate cuts of around 165 basis points in 2024, up from 150 last week and 140 on December 15, despite calls for caution from Frankfurt.
The latest call for caution came from Isabel Schnabel: On Friday, the "hawk" underlined that the European Central Bank still has some way to go before bringing inflation back to 2%. Meanwhile, the market prepares for the beginning of 2024, which promises to be an abundant supply of government bonds.
Piazza Affari rises, gold at 3-week highs
But the rally concerns all assets: Not only that Business Square +0,31 at the end of the morning or +25% since the beginning of the year. But while waiting for a new increase in the price list (pay particular attention to small and medium-sized companies), the other assets, which shine like on Wall Street, deserve special attention.
The ($2.066) is trading at three-week highs. Last Friday's data strengthened expectations about the start of a long cycle of rate cuts as early as the first quarter of 2024: after the Bureau of Economic Analysis announced that in November the PCE deflator recorded an increase of +2,6 % year on year, decelerating from +2,9% in October.
Salt too the euro on the dollar at its lowest level since August. Markets are betting that the Fed will cut interest rates before the ECB and already by March 2024, especially as recent data has shown a prolonged cooling of US inflation. The greenback is on track to post its worst performance since 2020 against a basket of six major world currencies. Against the Euro, the loss is around -3,5%. Bitcoin (42.600 usd) little changed from -2,7% yesterday. It is likely that some profit-taking is underway, given that 2023 is about to close with a leap of +160% and the market is still awaiting "certain" developments on the issue of the listing of Bitcoin ETFs on Wall Street, considered crucial for paint the future scenario of cryptocurrencies.
