And who would have thought that just a few days ago? Italy has become the darling of the markets thanks to the combination of the anti-populist political turnaround and the sharply declining interest rate level, which are still convenient for international managers, given that, despite the buying rush of recent days, the comparison with Spain and Portugal reveals that there is still a long way to go, as long as there are no nasty surprises. In return, the tension on the pound side is skyrocketing: Boris Johnson, gambling, asked and obtained from the Queen to make a parliamentary vote against hard Brexit almost impossible before the divorce from Brussels, set for October 31st.
These two pieces of news steal, for once, the headlines of the increasingly threadbare negotiation on tariffs. The news that Bill Dudley, until a few months ago president of the New York Fed, has taken the field asking the Central Bank to pronounce itself against Donald Trump, whose policy "is damaging the US economy", starting from the requests of sharp rate cuts "that would deprive the Fed of the ammunition it will soon need". We don't do politics, the central bank spokeswoman immediately specified. But the sortie reveals that in the US establishment, as the atmosphere of recession rises, opposition to Trump's policies is mounting.
TODAY THE SAMSUNG HEIR RISKS PRISON AGAIN
Here is the picture of the markets on the eve of the launch of the Conte bis.
The Asian Stock Exchanges are down slightly, with low volumes. Tokyo's Nikkei -0,1%, Hong Kong's Hang Seng -0,3%, Shanghai and Shenzhen CSI 300 -0,4%, Seoul's Kospi -0,2%. Today the Korean court will decide the fate of Jay Lee, the heir to the Samsung empire, already convicted of bribes.
The Chinese renminbi languishes at its lowest level in the last ten years: the number of sessions closed with a drop, in the event of a new drop, is eleven, never happened in history. For the seventh consecutive day, Banca del Popolo set the reference exchange rate at a higher level than expected. With regard to the negotiations on tariffs, yesterday US Treasury Secretary Steven Mnuchin said he did not know if the meeting scheduled for September will take place. The secretary himself said that there is no intention of intervening on the dollar, even if "the situation could change in the future". This last step is weakening the currencies of emerging countries.
The dollar is near three-year highs against the Korean won and the Malaysian ringitt.
Only the yen and the euro (1,108) remain solid against the US currency supported by the race for t Bonds.
30-YEAR TBOND YIELDS LESS THAN US DIVIDENDS
Gold starts charging again, after yesterday's modest decline, this morning it rose by 0,3%.
Wall Street yesterday was positive: Dow Jones +1%, S&P 500 +0,75 and Nasdaq +0,38%.
Among the reasons that supported the stock market was the fall in the yield on Treasuries: yesterday, for the first time, the yield on US thirty-year bonds slipped to 1,921%, lower than the average US dividend (2,04. XNUMX%)
STOCKS FALL, BUT OIL DOESN'T RISE UP
Brent oil trades at 60,1 dollars, down 0,6%, from +1,7% yesterday. US crude inventories are down ten million barrels, much more than expected, but this is a market driven by demand concerns, not supply concerns.
Positive yesterday in Milan Saipem (+1,32%), ahead of Tenaris (+1,15%) and Eni (+0,75%).
BTPs TAKE FLIGHT, LIKE BUSINESS PLACE
Btp at the lowest ever waiting for the launch of the Conte government backed by the Democratic Party and the Five Star Movement, sterling in free fall after the Queen approved British Prime Minister Boris Johnson's request to suspend parliamentary work in Westminster until October 14, a decision that favors Brexit, European financial day is revolved around these constantly evolving political events. Meanwhile, the decline of the German Bund continues: -0,716% on a ten-year basis.
Piazza Affari, thanks to the recovery in the final, closed in perfect parity with 20.991 points.
Among the European Stock Exchanges, only Madrid gains (+0,21%). The fear of recession is holding back the other lists: Paris falls by 0,34%, Paris -0,25%.
JOHNSON IMPOSES BREXIT, BUT NOT RISKING HEAD LIKE CHARLES I
London rose (+0,35%) against the fall of the British currency. The euro-pound exchange rate reaches 0,906 (+0,7%), the one with the dollar at 1,2168. The Queen's decision to halt parliamentary business ahead of her inaugural speech on 14 October makes passing a law banning no-deal Brexit almost impossible in practice, as a large part of the UK is calling for. assembly of Municipalities. The day of Britain's divorce from the European Union is set for October 31st. Of course, these are no longer the times of Charles I, who in 1649 was beheaded after he had frozen Parliament 20 years earlier because he had said no to financing the military campaign against Spain. But Boris Johnson has decided to play his head, in a metaphorical sense.
THE YIELD OF THE BTP BELOW 1%
On this side of the Channel, the most important news is the impressive run of the Italian paper. The trend picked up speed after the secretary of the Democratic Party, Nicola Zingaretti, reported that he had expressed to the President of the Republic, during his meeting, his party's support for the "attempt to give life to a new government with a new political majority" led by outgoing premier Giuseppe Conte.
The market response was immediate and impressive. The Italian 0,98-year BTP fell during the day to a yield of 1,04% before settling at 174%. The spread with the Bund drops to 170 basis points, after having touched a minimum of XNUMX.
The 2-year BTP rate returned to negative territory after about a month.
MEDIUM-TERM AUCTION TODAY: STRONG DOWN RATES EXPECTED
After the positive outcome of yesterday's BOT auction, today the Treasury is offering medium/long-term securities worth €7,25 billion in auction, including €3,5-4 billion of the new 10-year BTP April 2030, coupon 1,35 %, which offers a yield of 1,15/1,08% on the gray market, just a breath away from the record set in August three years ago, when the 1,14-year bond was assigned at XNUMX.
FOR LISTED BANKS A GAIN OF 3,9 BILLION
The most immediate and significant consequence of this rally, notes Marino Masotti, an analyst at Websim, is that the BTP "is no longer a ballast but a lifesaver for bank stocks. Indeed a balloon: thanks to the impressive capital gains generated by the appreciation of the Italian government bonds in the portfolio”.
Suffice it to note that at the end of July banks based in Italy had 409 billion euro of government bonds in their portfolios, the highest since August 2016. If the average life of the portfolio is three years, it follows that a drop of one basis point of yield translates into an appreciation of 3,9 billion euro in the portfolio of listed banks for every 100 basis points of reduction in yield. In this context, the final rise in the credit sector, in contrast with the rest of Europe, is not surprising. The big Unicredit and Intesa, the most loaded with government bonds, are the best with increases of 1,8% and 1,1% respectively. Banco Bpm +0,6%, Ubi Banca +0,5%.
MORGAN STANLEY SENDS LEONARDO INTO ORBIT
Leonardo's leap (+4%) on which Morgan Stanley has started hedging with an 'overweight' rating and a target price of 13,3 euros, in first place among the preferred stocks in the European defense sector.
Atlantia is among the worst in the main list with a drop of 2,2%, penalized by the hypothesis of a government that still sees the presence of the 5 Stars, which have promised to revoke the concession to the subsidiary Autostrade per l'Italia after the collapse of the Morandi bridge in Genoa.
JUVENTUS SUFFERS, MEDIASET DOWN
Juventus remains in the sights of sales (-2,7%). Buzzi (-2,39%) and Recordati (-2,5%) suffer.
The Mediaset share decreased to 2,88 euros (-1,84%), which however maintains a certain margin from the threshold of the withdrawal price, 2,77 euros, in view of the meeting on 4 September. In the new Dutch holding which should be born on that occasion, Fininvest will have 47,8% of the votes.
Outside the main basket, Italian Exhibition Group loses 7,1% after the surprise departure of CEO Ugo Ravanelli.
Technogym also dropped sharply: -6%.
