Stock markets uncertain but government bonds recovering in the aftermath of the ECB's rate cut. After the estimates of the European Commission which lead to an exit by Italy from the infringement procedure on the excessive public deficit, Milan remains in flux. Paris also moved to parity, while Frankfurt and London rose by 0,15%.
The Btp-bund spread dropped sharply which, benefiting from yesterday's moves by the ECB, opened in the morning below 260 basis points and yielded 3,74% and was confirmed in the 257 points area by mid-morning. Furthermore, Bloomberg reports that the yield of the two-year BTP falls for the first time below 1% on the secondary. The Spanish Bonos also reacted positively to the rate cut: the spread on the Bund fell to 290 points and the yield below 4%, the best level since October 2010. The Indian central bank also cut the cost of money.
In the morning, the European Commission published its spring estimates which show that Italy is in a position to close the infringement procedure on the excessive public deficit. According to the Commission's estimates, the deficit/GDP will be 2,9% in 2013 (the same as the Government's) and 2014% in 2,5 (+1,8% the Government's estimate). Debt/GDP will be 131,4% this year, growing again next year to 132,2%. EU Commissioner Olli Rehn commented that this estimate "facilitates Italy's exit from the excessive deficit procedure".
However, the Commission's estimates reveal that three of Europe's five largest economies will exit the deficit limits in 2013: Spain, the Netherlands and France. For Paris, Rehn deems two more years "reasonable" to bring the deficit below 3%.
Returning to Italy, the commission cut the 2013 GDP to -1,3% from -1% and to +0,7% in 2014 from +0,8%, predicting that, although there are currently no signs of recovery in short term due to consumer and business confidence still in negative territory, the payment of public administration debts should sustain a slight recovery in the third quarter.
Markets are now awaiting April afternoon US jobs data (new nonfarm jobs, unemployment rate, new private sector jobs) and the April ISM services index.
In Piazza Affari on the Ftse Mib Lottomatica rises +1,83% on which Nomura confirmed the buy with a target price of 22 euros, Autogrill +0,96%, Telecom Italia +0,85%, after a leap of 2% in the wake of the hypotheses of a 40% quotation of the network (topic on the table of the next board meeting on 8 May when the point will also be taken of the 3Italia integration project). Finmeccanica +0,80%, Buzzi Unicem +0,71%. At the bottom of the index Atlantia -1,26%, Bper -1,08%, Mediolanum -1,07%, Stm -1,04%, Parmalat -1,04%. The banking sector is weak: Bpm -0,10%, Mps -0,43%, Unicredit -0,05%, Intesa -0,58%.
