“The deficit/GDP ratio will be 2,4% for 2019, 2,1% for 2020 and 1,8% in 2021”. So Prime Minister Giuseppe Conte at the end of yet another marathon to fine-tune the update note of the Def. The government has thus adjusted the shot in an attempt to send a reassuring message to the markets and to Europe.
Objective partially achieved, even if the duel over the allocation of resources is certainly not over between the government partners. And the EU commissioner Pierre Moscovici sends a further torpedo against Rome, noting that "Italy has chosen a xenophobic and Eurosceptic government" prompting Salvini's reply: "You talk nonsense". But the atmosphere seems less tense, and the fever on the markets finally subsides. Thanks also to the words of Minister Paolo Savona who, surprisingly, professes pro-Euro sentiments.
NOMURA, UBS AND ALLIANZ: ITALY YES, AT THESE PRICES
Some large brokers are starting to look with interest at our BTPs. Nomura wrote in a report that the sharp rise in yields opens up a buying opportunity for Italian government bonds in the belief that Italy will stay in the Euro. In detail, you consider a ten-year yield above 3% with an equal yield of the German Bund at 0,5% unjustified. Ubs is limited to the short-term one. For Allianz, you have to take advantage of these moments of panic to buy. In short, three groups that manage assets worth over 3000 billion euros think that, after the great landslide, Italy is an opportunity, one of the few in the world of bonds.
POWELL: WE WILL BRING RATES TO NEUTRAL
Yesterday evening, in fact, while the Italian government was busy drawing up and unpacking the accounts, Fed Governor Jerome Powell affirmed that interest rates, still accommodating today, will certainly be brought to the neutral area, a level of the cost of money that it does not favor economic growth but neither does it slow it down. At that point, the Federal Reserve could go further, with further rate hikes suggested by the new positive data coming from the economy: the services sector is at a 2-year high, in September employment at private companies rose by 230 thousand units.
THE YIELDS OF T BONDS, GM-HONDA AXIS, SURPASS
Powell's guidance pushed the US 3,18-year bond yield to 3,07%, from 0,2% the day before. Wall Street's response was also positive: Dow Jones +15% (new record, number 500 of the year), S&P 0,07 +0,32%, Nasdaq +XNUMX%.
GM rises (+2,1%) after the agreement with Honda for the development of the autonomous car. Worth noting is the leap of Michael Kors (+3%): analysts like the purchase of Versace.
But the arrival of a new credit crunch (80% of operators take for granted an increase within the year) is causing a jolt almost everywhere on the bond market, this morning in further tension: in Asia the T bond rose this morning to 3,2135%, the highest yield in the last 7 years. Japan's 10-year bond was also up 0,160%, a 32-month high. Meanwhile, emerging currencies are losing ground, starting with the Indonesian and Indian rupees, on the eve of tomorrow's central bank meeting.
TOKYO DOWN, JP MORGAN CUTS CHINA
Asian stock exchanges down this morning. Tokyo loses 0,8% and the yen suffers from the strength of the dollar: the cross drops to its lowest since March 2017. The ten-year government bond rises to 0,15%, a level never seen in the last two and a half years.
The Hong Kong Stock Exchange lost 1,7%, also because JP Morgan cut its estimates on China's economic growth, a decision which translates into a reduction in exposure to Chinese equities.
The markets of South Korea (Kospi index -1,5%) and India (BSE Sensex index -1,3%) were also down. The dollar crushes the Indian rupee, at 73,7, an all-time low.
The euro also weakened, reaching its seventh consecutive day of decline against the dollar at 1,147.
Oil still up, after the jump in crude stocks in the United States: Brent is trading at 86,2 dollars a barrel, closing last night with an increase of 1,8%.
MARKET PLACE INTERRUPTS THE DISBASE STREAK
Piazza Affari managed to reverse the trend: after five consecutive sessions of decline, the FtseMib index closed with a rise of 0,84% at 20.736.
The continental price lists also improved, with the exception of Frankfurt, closed for public holidays: Paris +0,43%; Madrid +0,65%-
London +0,48%. Aston Martin (-4,6%) lost up to 6,5% on the first day of trading on the London stock exchange, after the price was set at £19 per share at the end of the IPO (on a range initial price of £17,5-22,5). The group debuted with a valuation equal to approximately 23,6 times the Ebitda, higher than that of Ferrari (22,2 times).
THE SPREAD DOWN TO 280
Closing up on the upside for BTPs, supported by the revision of the deficit/GDP targets. After an opening below 290 and a subsequent widening above 300, the Btp/Bund spread fell to 280bp in the afternoon, more than 20bp below the morning peak, also in the wake of the words of the minister for relations with the EU Savona , according to which respect for European rules is fundamental and Italy will not take any initiative against the euro.
The yield on the Italian 3,28-year bond fluctuated during the day between 3,44% and 1,19%. The two-year, which fell by almost a quarter of a percentage point to 11%, recorded the largest daily decline since last June XNUMXth.
The Treasury assigned 2,131 billion Btp in September 2028 (out of a maximum of 2,5 billion) in a swap operation in government bonds. Via XX Settembre withdrew four BTPs with maturities between 2019 and 2021 for a total amount of approximately 2,367 billion.
Today the primary market will be dominated by auctions in France and Spain, with almost 15 billion in total of paper arriving.
CREDIT RECOVERY, BANCA IFIS FLIES
A breath of fresh air in Piazza Affari for the banks: sector index at +0,63%, slightly higher than the European one.
Banco Bpm (+2,13%) led the rebound. Berenberg upgraded the rating to 'hold' from 'sell'. Increases between 0,3 and 0,7% for Ubi, Intesa and Unicredit. In contrast Bper )-1,3%).
In strong growth, outside the main index, Banca Ifis (+5,46%), which accelerated the recovery on the eve (+5,36%) from the lows of the last two years, reaching 19,70 euro. The institute, it was specified in a press conference, has 1,2 billion euros of free cash against commitments to the system for 200 million. A situation, judged by the management, of "absolute tranquillity". The outlook for 2018 is for an after-tax profit of 140 million euros.
Creval +5,16%. The MEF has granted the Gacs state guarantee on the senior tranche of the securitization of bad loans for a total of 1,6 billion gross.
RECORD AT THE TOP, GOOD PRYSMIAN
In the rest of the list, Recordati shines (+3,65%), the best stock on the list in the wake of the request made to a pool of banks for lines of credit for approximately 500 million euro in view of possible acquisitions.
Prysmian performed well (+2,38%), which was awarded a 125 million euro project for a submarine cable between Crete and mainland Greece.
THE 5G AUCTION CLOSES, BREATHE TIM
Tim's landslide stops (+0,5%): Yes it is 5G auction closed with the assignment of the rights to use the frequencies: the State will collect 6,55 billion euros, an amount more than 4 billion higher than the minimum envisaged by the Budget Law (2,2 billion). For the company led by Amos Genish the "bill" exceeds 2,4 billion.
Leonardo (+2,8%) and Enel (+2,54% to 4,52 euros) also stood out among the blue chips.
The luxury sector is down slightly: Moncler-0,8%, Luxottica-0,9%. Heavy Safilo, which continues to fall and drops by 6,81%.
ASTALDI BOUNCES, SALINI THINKS ABOUT THE PURCHASE
Troubled waters in the world of infrastructure. Trevi, world leader in underground engineering, loses 6% and is the worst stock of the day.
Astaldi +3,5% on the wave of rumors advanced negotiations with a Chinese consortium for the sale of the Third Bosphorus bridge project and of Salini Impregilo's interest in taking over the company. Salini herself lets it be known that she "is following the situation carefully" with the aim of evaluating every possible option consistent with her objectives of financial discipline and value creation ". In recent days, Astaldi has decided to ask for an arrangement with creditors "with reservations" and is considered by S&P to be one step away from default after the downgrading of the rating from 'CCC-' to 'D', "a technical fact" according to the company.
