THE ECB CUT THE DISCOUNT RATE TO 0,05%. THE EXCHANGES FLY, THE SPREAD AND THE EURO DOWN
The European stock exchanges are running after the ECB's decision to cut rates. Milan accelerates and the Ftse Mib index gains 1,44% to 21.132 points, ahead of Paris and Madrid (+0,5%) and Frankfurt (+0,1%), while London rises by 0,3%. Stock markets had already reacted to the Bank of England's decision to leave rates unchanged.
The Frankfurt institute has in fact decided to cut rates from 0,15% to 0,05%. Also cut for the rate on deposits which goes from -0,1% to -0,2 and for the marginal rate which goes to 0,3%. Vigorous measures that lead us to foresee other expansive measures in the near future. In the meantime, in addition to the rise in stock markets, the following should be noted:
– the sharp decline of the euro: -0,9% against the dollar to 1,3076, the lowest since the summer of 2013.
– the drop in yields on government bonds in the euro area: German, French, Spanish and Italian bonds fell sharply (0,88% ten-year yield).
The first signal came this morning precisely from the government bond front. Even before the Frankfurt decisions, the Btp-Bund differential began to fall: the spread had fallen to 146,7 points in the late morning, reaching its historic lows with a yield down to 2,41%.
In the morning, Spain had placed 3 billion euros, equal to the programmed maximum, of Bonos at 10 and 30 years, recording new historic lows in terms of yield.
France also placed Oats in November 2024, May 2030 and May 2045. Average yields fell to new all-time lows. In particular, the cost of ten-year financing stood at 1,32% from the previous 1,77%. The news surprised markets and beyond.
In the morning the president of the Eurogroup, Jeroen Dijsselbloem, had extinguished the market's expectations on new extraordinary measures by the ECB, arguing that more time is needed to evaluate the impact of the package of expansive measures launched last June.
