Long live the encore! The appreciation for the reconfirmation of Sergio Mattarella and, no less important, the tandem with Mario Draghi is clear from the markets. The spread is lowered against the Bund at 125 basis points, from 132 basis points on Friday evening, when many were already considering the collapse of the government and the risk of early elections, a double risk which would probably have led to a gap exceeding 200 points. A billionaire nightmare that the markets promptly removed as soon as trading opened, lowering the yield of BTPs at 1,22%.
neither the alarm on the accounts launched from Saipem, in free fall (-30% approximately), extinguished the optimism of the stock market, albeit in slowdown compared to the start, when the threshold of 27 thousand points was exceeded again. But stronger than the fears evoked by this unexpected stop is the chorus of judgments from analysts and large investors who, among other things, highlight the narrow escape but also the difficulties however to come, between increases in the cost of money against the dollar and negotiations on the Stability Pact which promises to be complicated, factors that justify the slowdown in BTPs after the euphoric start.
The mission remains difficult, but, if it failed Draghi's credibility, would have simply been suicidal, as she points out Oliver Eichmann of Dws: “As regards the further development of the risk premium on Italian government bonds – he says – we expect a moderate increase in any case over a twelve-month horizon. We assume that the European Central Bank will most likely stop net bond purchases at the end of this year. At the same time, it is likely that the yield on Bunds ten-year bonds rise further this year in the range of plus 0,2%. Both factors could prompt investors to adopt a somewhat more cautious stance towards Italian government bonds. We expect a moderate increase in the yield spread of 1,5-year Italian government bonds over Bunds to around XNUMX percentage points over the course of a year”.
In short, the passage remains tight: “In the long term – predicts the Dutchman Marteen Geerdink of NN Investment – re-election implies that Draghi now has a window of 6-12 months to push ahead with the reform agenda and put Italy on a stronger foundation. This should bode well for the Italian markets in the short to medium term, but challenges remain as these reforms need to be implemented in a window closing due to national elections which are scheduled for 2023 and may bring new uncertainty”.
It won't be a walk in the park but, he points out Bank of America, for once, those who have bet on the beautiful country have hit the mark. In a report titled Buy Italy, the US institute recalls that the market capitalization aggregate of Italian financial stocks covered by analysts has gone from 99 billion euros a year ago (coinciding with Draghi being elected premier) to the current 142 billion euros, i.e. a 44% rally destined to continue due to various factors: the decline in non-performing loans, the effect of the Pnrr but above all the sensitivity of the accounts to the trend in government bonds. It is certainly no coincidence that this morning the most brilliant stock is Poste Italiane +3%, the main holder of government bonds.
Finally, to justify a moderate optimism, there are GDP data: the Italian economy recorded a significant recovery in the fourth quarter of 2021, with an annual growth of 6,4%. Compared to the previous quarter, growth is 0,6%, the consensus was +0,5%. Of course, there has been a deceleration in the pace of growth compared to the first three fractions, mainly due to the worsening of the epidemiological picture due to Omicron e al dear-energy. Just as there are concerns for the future of the country beyond the 2023 elections, evoked by Barclays. But, at least for today, let's be content.
