The messages arriving from the economy two days after the ECB meeting leave little doubt: the recession is underway and it promises to get worse. This is the analysis that emerges from the PMI data arriving from France and Germany, the two stuck engines of the Eurozone. L'Eurozone PMI index it decreased to 46,5 in October, the lowest reading since November 2020. Excluding the Covid-19 pandemic months, it was the lowest reading since March 2013.
The recession is progressing, the stock markets are reacting upwards
The financial markets, after some initial ups and downs, react upwards: in Milan the index rises by approximately a quarter of a point to around 27.600 points. There is hope that the terrible economic situation in manufacturing and services will convince the ECB not to limit itself to leaving the rate lever unchanged (after ten increases in a row) but to slow down on the reduction of the budget and purchases on the PEPP, the sword of Damocles that hangs on the economy already in recession. The other markets also rise with the exception of London, held back by Barclays' terrible results -6,33%. The star of Hermès +2,4% which also pushes Moncler up +1,5%.
It's raining purchases on the bond market and on utilities
Hence the current of purchases on the bond market, anticipated yesterday by the words of Bill Ackman, the king of bond investors who yesterday, closing his short position on US securities, tweeted: "There is too much risk in the world, we cannot stay short US debt securities". A signal that is also having its effect in Europe: the yield of the ten-year BTP drops to 4,75%, that of German bund at 2,79%, for a spread of 195 basis points. But the Treasury's thirst for money is truly inexhaustible: as part of its efforts to bring small savers back to holding increasing shares of Italian debt, the government, according to the text seen by Reuters, is about to introduce in the budget law for the next year one rule that excludes government bonds from the ISEE calculation, the indicator used to evaluate the economic situation of families who intend to request a subsidized social benefit.
In this frame utilities shine on the price list, from A2a to Enel, favored by the decline in BTP yields as well as Erg, leader of the day, Among the banks Unicredit advances +1,25% after a slow start in line with Barclays' performance.
Bags: Stellantis pays for the Uaw strike. GM, Microsoft and Alphabet accounts are coming soon
Among the negative notes, the difficulties of the cyclical sectors stand out, starting from the four-wheel sector, slowed down by the bad performance of the German economy but even more so by the news arriving from the USA. The Uaw union has extended the strike to the main Stellantis-1,7% plant, where Rams are produced. The dispute also threatens investments in US electric cars by Korean groups as already agreed with Detroit's 3Bug. A more precise indication will arrive in the afternoon with the release of GM's quarterly report. Also released are the accounts of General Electric, Halliburton, Texas Instruments and Coca Cola.
However, the market's attention is focused on the numbers Microsoft need A which will be released this evening after the closing of the price lists. There United States stock exchange should open higher. Nasdaq futures +0,5%. Dow Jones Futures +0,2%.
Bond purchases continue. Treasury Notes ten-year yield at 4,81%, retreating from the 5,01% reached yesterday during the day.
