Le economic policies they turned as one person (instead of one man, taking into account that Lagarde is there too) towards the support. But it is a support that chases the growing damage to the economy and struggling to keep up.
In some countries recourse has been had to the ultima thule of economic policy, "helicopter money", and in all countries the liquidity created by central banks it has gone to sprinkle, without really soothing it, the parched earth of the coffers of businesses and families.
Both the trends of stock markets that those gods rates are related to these massifs stimulus actions. If the slight rise in long-term rates in Germany is linked to an optimism (aka less pessimism) about the outlook, the upside for i btp it is less comforting, and is to be seen in relation to the effects on the deficit and debt of the enormous disbursements in progress.
The problem for BTPs is not so much in the difficulties of placement of new public securities (these placements are in practice guaranteed by ECB purchases) but in the higher cost per interest service compared to other countries, also taking into account the rebates of central bank profits. There controversy on coronabond it's essentially there.
Behind all this is also the question of the debt, whose weight in Italy would sail towards Japanese levels (at least in terms of gross debt – it is already today at Japanese levels in terms of net debt). The frontiers of economic policy are shifting and the "ultimissima Thule" is present in potential, if not in actuality, the monetary financing of public deficits, which would lead to a permanent increase in debt, which however would cost nothing and would not be never refunded (of course, there is a statutory ban on the ECB, but there are technical ways around it…).
If the long-term real rate differential is one of the main determinants of exchange rates, the dollar, which saw this differential against the euro (T-Bond vs. Bund) down 169 basis points compared to the highs of last year, it should be much weaker, but this prevents its role well-refugethat yuan it is cautiously appreciating, because its economy was the first to recover (better: to convalesce).
the nominal efficiency of T Bond at 10 years it is at historic lows (0,73%), the negative one of Waist is a little less negative (-0,33%), while i btp, with 1,59%, they are close to 200 points spread with the Bund. If it's any consolation, the spread has narrowed BTp/Bonos Spanish, dropped from 120 points on March 18 to 80 in the latest data. A narrowing of the gap to probably be related to the spread of the virus in Spain which, being more "virulent" than in Italy, worsens growth prospects and increases the cost of saving the economy.
The level of real rates, whether low or negative, is much higher than the level of (negative) change in GDP in the various countries. The only way to get them down would be one higher inflation, but there is no counting on it. Central Banks do their best to raise it, creating liquidity, but past experience shows that there is no connection between the quantity of money and inflation, when the economic system's thirst for liquidity is very high.
On the financial markets thegold, after ups and downs, it has regained its role as a refuge (best wishes to the gold bugs). In the stock markets Wall Street has recovered a little less than half – e the Eurostoxx a little less than a third – of what was lost compared to the top anti-viruses. But these recoveries they don't convince. The crisis has not yet unfolded all its damage, and the enormous public support for the economy it will not be enough to defend company profits destined to worsen many magnitudes more than the economy.
