A new electoral campaign opens and market indicators remain at the center of attention at the beginning of the week which opens with holidays on the Anglo-Saxon markets and the US Treasury/Bund and Bund/BTP rate differential under pressure. Further enlargements are expected and the passage due to the proposal of a government led by Cottarelli will curb new volatility peaks but will not stop a new high for the euro-dollar currency ratio expected close to 1,16.
And while the currency turbulence continues to involve the emerging markets, after the rate hike by the Turkish Central Bank to stem the collapse of the currency, also the electoral outcome of the Venezuelan elections, in full debt restructuring (with rates over 20% ) and with the disavowal of the oppositions, and the umpteenth crisis in Argentina will fuel a further jump in the price of oil. Russia and Saudi Arabia then impose their line on OPEC, and this further turbulence will characterize a difficult week for European markets, complicated by Trump's possible extension of tariffs to the auto sector. Meanwhile, gold in euros is at its highest since September 2017.
After three weeks of decline, the Ftse Mib has returned to the levels of early April and could touch the psychological threshold of 22000 points today and the 2,50-year BTP could quickly move close to 200%, leaving the spread above XNUMX bp until the political rhetoric subsides with a greater sense of responsibility towards the country's needs for economic stability.
And while the proclamations that have little to do with a constructive policy at the service of the country are flowing on social networks, over 100 billion euros of emissions are missing to continue with the payment of the maturing debt, it is evident how urgent it is to bring the focus of a Government measures necessary to resume competitiveness and solid productivity in the country. Let's not forget that Italy is the tenth country in the world rankings of the World Trade Organization, drawn up by the WTO, where the list of exporting countries is led by the USA, China and Germany.
While it seems increasingly difficult to understand why they wanted to insist on imposing a Minister twice as old as the President of the French Republic who has never expressed himself coherently with Italy's role as a founding country of the EU, the reality is that they are months that ministerial activities are blocked by the political impasse and that the democratic alternation with a convincing government program has not been achieved. And if for investors this translates into a drop in consensus towards a portfolio allocation in favor of the Italian markets, even the whole positive wave set in motion in the real economy by the PIRs and the SPACs crashes on the shoals of the umpteenth political crisis.
The volatility on the spread essentially prevents new issues on the primary bond market and makes those corporate and non-corporate issuers lose their bearings, which find the means of financing necessary in the market to fuel development plans, even at an international level. The blocking of regular private and public refinancing activities are the concrete danger for the notorious spread to twist back on itself, not considering these aspects is short-sighted and deleterious like the heavy gaps in a government program that everyone expected already ready and broad to time, being an expression of those forces that were playing an opportunity now definitely wasted.
