THEEurozone continues to disappoint. The signs of stabilization in the rest of the world – pronounced in China, while i Use they continue to enjoy moderate and stable growth – they are not helping the euro countries. These perceive the bad news – geopolitical tensions, the exhausting ups and downs (yes agreement, no agreement…) on the US-China negotiations, Trump’s tariff club… – and do not see the good news (more spending on private and public investments) because they are not here. The British elections should end the saga Brexit, but the post-Brexit unknowns remain.
THEItaly, thanks to the political fibrillation (which has always been there, but there is never an end to the worst…) remains behind the growth prospects.
For inflation, tests of upside. In China the surge in inflation (to 3,8%) owes much to the swine fever epidemic which sent the price of pork. However, the dynamics of underlying inflation also increased in theEurozone and Italy, even if producer prices suggest that we are not facing a turning point. The quotes of raw material and oil show no significant changes, even if in perspective they are favored by the good prospects of Chinese production, the largest consumer of commodities for many years.
Rates on Bunds and T-Bonds they keep the rise. Long-term rates, it was noted last month, recorded modest increases and these are confirmed. Where the increase was strongest, unfortunately, is for yields btp, thanks to the incredible controversy – vain and harmful – on the European Stability Mechanism, which gave the impression that Italy was close to having to ask for the help of the ESM, while it has no need. The T-Bond/Bund spread on real long-term rates is in any case decreasing, which should weaken the dollar. The Chinese currency confirms the depreciation above 7 yuan per dollar, a useful insurance policy against crushing on US-China trade deals.
Long live the US recovery from consumers 
The will-o'-the-wisp of inflation 
The spread of real rates undermines the king dollar
