Uncertain markets at the start of a week that promises to be full of appointments. Weigh on the price lists the G7 fiasco in Canada: Donald Trump, already in Singapore for tomorrow's meeting with the Korean dictator Kim, has sensationally disavowed the final statement prepared by Prime Minister Justin Trudeau, declaring himself offended by the tone used. The trade war is closer. Angela Merkel said that Trump's tweets, in addition to being disappointing and even a little depressing, reinforced her belief in the need to "commit to a united and strong European Union". The US newspaper Axios reports that, in the April meeting with Emmanuel Macron, Trump allegedly stated that the European Union "is worse than China". Trump's praise of the new premier Giuseppe Conte, appreciated for his openings in Moscow, fits into this context.
ASIA UP SLIGHTLY, WAITING FOR KIM AND DONALD
The tug-of-war on tariffs slows down, but does not cancel the optimism in view of the historic meeting between the US and North Korea tomorrow in Singapore. The Tokyo Stock Exchange recorded a rise of 0,35, in line with Hong Kong. Better the Korean Kospi (+0,4%) and Shanghai (+0,5%). Wall Street futures are weak. Slight increase in the opening in London.
Oil rises: Brent at 76,55 dollars a barrel, Wti at 65,66. On the other hand, great turmoil on the cryptocurrency markets, shaken by the cyber attack on CoinRail, an important platform in South Korea. Bitcoin loses 12% to 6753 dollars, the loss since the beginning of the year is 53%.
In this turbulent geopolitical context, the attention of the markets is also concentrated on the heads of the most important central banks in the world.
EURO UP: THURSDAY THE SLOW GOODBYE TO QE
The euro climbed this morning beyond the barrier of 1,18 against the dollar (+0,25%) in anticipation of the announcements on Qe. In fact, at Thursday's meeting in Riga, the ECB should not touch the reference rates but, as anticipated by Peter Praet, the chief economist who is very close to Mario Draghi, the meeting could define the times and methods for terminating the Quantitative Easing. Currently, the ECB buys 30 billion a month (as well as reinvesting proceeds from redemptions of maturing securities). The amount could be halved from September to December before it shuts down. As for the rate hike, the one on deposits which is now negative (-0,4%) should only be touched from July 2019, to return to zero at the end of next year.
CONSOB, NAVA'S FIRST TIME AT PIAZZA AFFARI
The announcement, which could even be postponed to July, coincides with an extremely delicate moment for the Italian debt market: the lack of confidence in the future trend of the public finances translated into a sharp fall in both the stock market (-3,5% in 'last week). The spread between the ten-year Btp and the Bund rose up to 271 points, that on the two-year bonds to 249.
This morning the annual meeting with the new president of Consob, Mario Nava, will be held in Piazza Affari. Many issues on the table starting from the "great peace" the Commission and the Bank of Italy after the disagreements that emerged during the parliamentary investigation into the banks.
BOT AND BTP, WEEK OF FIRE FOR THE TREASURY
In this climate of uncertainty, despite the reassurances of the Minister of the Economy Giovanni Tria on Italy's willingness to respect commitments and deadlines, the Treasury faces the test of the mid-month auctions. Tomorrow 6 billion 12-month Bots will be auctioned, less than the 6,5 billion maturing. Light hand even for longer maturities. Wednesday will be the turn of medium-long term bonds: between 4,25 and 5,75 billion euros in the reopening of four government bonds.
In particular, between 1,5 and 2 billion euros will be offered in the fifth tranche of the 3-year BTP April 2021, coupon 0,05%; between 1,75 and 2,25 billion of the seventh tranche of 7-year BTPs in May 2025, coupon 1,45% and between 1 and 1,5 billion in total between two thirty-year bonds, one of which is off-the-run: this is the Btp being issued in March 2048, coupon 3,45, and September 2046, coupon 3,25%.
On Friday the Bank of Italy will communicate the amount of the public debt.
On the political front, a meeting at Palazzo Chigi with the economic ministers, above all Giovanni Tria and Luigi Di Maio, is already set for Tuesday morning. There is already a draft on the Treasury minister's table that can be summarized in two points: the commitment to sterilize VAT increases and the opening of negotiations with Brussels to obtain the greater deficit necessary to finance the autumn maneuver .
THE FED KICKS OFF THE SECOND FED OF 2018
No less important are the next choices of the US central bank.
On Wednesday evening, at the end of the board meeting, the Federal Reserve will announce a quarter point increase in official rates, as largely expected by the markets which will closely follow the words of President Jerome Powell to decipher the next moves of the Central Bank . Sentiment predicts that the Fed intends to proceed with new cuts and reductions in the central bank's balance sheet, without worrying too much about the effects on the consequences of the most indebted economies on the dollar: Turkey, India, Indonesia, Brazil and Argentina, without neglecting the Mexican peso , at its lowest for 15 months, in the face of the now obvious denunciation of the NAFTA agreement.
Only a sharp drop in Wall Street could convince Trump and the Fed to change policy. But the US Stock Exchange, for now, is in good health. In the last week, the Dow Jones gained 2,76%, the S& P 500 index 1,62, the Nasdaq 1,21.
The Bank of Japan board meeting will also be held on Friday.
RUSSIA-ARABIA, THE WORLD CUP WITHOUT ITALY
Among the events of the week, the vote of the British Parliament on the Brexit negotiations should also be noted: Theresa May risks a heavy defeat in the Commons.
"We do not expect the World Cup to provide any appreciable stimulus to the Russian economy." This is the opinion of Kristin Lindow, an analyst at Moody's on the eve of the kick-off of the event: it starts on Thursday with Russia-Saudi Arabia.
