The worst is over? This does not appear to be the attitude of the markets after the tunnel of the first half, the worst for fifty years. The US stock exchanges are reopening their doors today, after the 4th of July bathed in yet another senseless massacre, with some hope of a recovery in the short term, but attention is already being paid to the start of the quarterly campaign. And there are many concerns, especially for bank accounts.
On July 11, Gazprom will stop the gas pipeline to Germany
Meanwhile, in a week, Europe will face yet another emergency: on July 11, Russia will turn off the taps of Nordstream 1, the gas pipeline leading to Germany, for ten days of scheduled maintenance. In the past, this was a non-event as Gazprom diverted flows to Ukrainian pipelines. But this time? The blackout risk falls on a country which, for the first time in thirty years, recorded a trade deficit in May. Enough to reawaken the Bundesbank's long-standing hostility towards an ECB policy that avoids fragmentation between the various government bonds of the Union, a danger also recognized by the Dutch hawks. Hence the risk of a sharp rise in the spread, the last thing Italy needs, already grappling with the slowdown in growth.
Biden removes tariffs on clothing made in China
- In this gloomy picture, the good news comes from the US-China front: President Biden, anticipates the Wall Street Journal, is preparing to review the duties on Chinese goods already this week: imposed by Trump. The measure will concern consumer goods, especially clothing, with the explicit aim of cooling down US inflation. The turning point was decided yesterday in a long-distance confrontation between Liu He, President Xi's right-hand man in economics, and the head of the US Treasury; Janet Yellen.
Massive rate hike in Australia, soon in Korea
- The news lifted the mood of the markets in the Asia Pacific area +0,3% looking for good reasons to rise from the lows of the first half (-16%). In evidence Tokyo +0,8% driven by the recovery of services and by imports with China. The colder the reaction of Shanghai -0,4%.
- Australia raised rates by half a point, more than expected, from. There Sydney Stock Exchange it is up 0,5%, from 0,85% to 1,35%. after the announcement of the Reserve Bank of Australia: the board decided to bring the reference rate to 1,35% from 0,85%: the cost of money, due to the two consecutive increases of 50 basis points each, returned on the levels of May 2019. In the statement, Governor Philip Lowe warns that more increases are on the way.
- It highlights the Seoul Stock Exchange: Kospi index +1,3%. Inflation, which has risen to 6%, is also the first problem in Korea: the rise in prices is at the levels of 25 years ago, at the time of the Asian crisis. Discounted rate hike 50 points next week.
Opening up for Europe, but the German halt weighs
The prospect of the forthcoming rate hike does not slow down the opening of European markets this morning, yesterday falling rapidly towards the end. European stocks should open higher, EuroStoxx 50 index future gains 0,5%.
Colorless Piazza Affari -0,05%, braking in the final after a colorless session, enlivened by the landing of Exor in Mérieux, the promo investment in the health sector of the Agnelli holding company. The deal boosted Diasorin, the French company's main competitor.
In the end, the pressure on the spread returned: the differential between the Italian and German 190-year bonds, already wavering, widened, rising to 3,21 basis points (+3,24%) with a yield of the BTP of +1,34% and that of the Bunds of +XNUMX%.
Nagel (Bundesbank): "Interventions on securities only in exceptional cases"
The change of course was provoked by the statements of the president of the Bundesbank Joachim Nagel, who was openly skeptical of the antispread parachute which the president of the ECB Christine Lagarde is preparing to launch on 21 July, simultaneously with the first EU rate hike for eight years. According to the German banker, "it would be fatal if governments assumed that in the end the Eurosystem would be ready to guarantee favorable financing conditions for the States". Nagel added: "It is only in exceptional situations and limited conditions that unusual measures can be justified."
The swerve by Nagel, who has already opposed the anti-spread plan by voting against President Lagarde for the first time, falls on a gray day for the German stock exchange -0,23%. The Berlin government is committed to the Uniper rescue, the utility which is the largest European buyer of Russian gas and which, due to the cut in flows from Moscow, is forced to procure on the spot market, at prohibitive costs which it currently cannot pass on to customers.
The eurozone economy could enter a recession if Russia cuts off gas supplies and industry has to adjust to the energy shortage. This was stated by Luis de Guindos, the vice president of the European Central Bank. “If so, in our alternative scenario, we see a recession not just in Germany but in the eurozone,” de Guindos said.
US notes T at 2.95%, Atlanta Fed sees recession
In the USA, awaiting the reopening of the stock markets, the 2,95-year Treasury Note is down, the yield drops to 7%, +XNUMX basis points. As a result of the two-year movement, the yield curve on the two-year-ten-year stretch has flattened: the spread is around zero.
According to what he says Antonio Cesarano, Chief Global Strategist of Intermonte SIM, if in the first half of the year attention was almost exclusively focused on inflation and supply chain problems, today what is worrying is the risk of recession, now no longer excluded even by the governor of the Fed, Jerome Powell. The Atlanta Fed assumes a 2,1% drop in annualized US GDP in the second quarter, which would imply a technical recession for the country.
WTI oil at $110 a barrel. Brent at 113 dollars, little moved.
Gold down 0,2%.
