An explosion of confidence has overwhelmed the markets after the decisive words of the president Mario Draghi in defense of the Euro. “The ECB will do whatever it takes to safeguard the euro. And believe me it will be enough”. Moreover. There is no room for discussions on the ECB's mandate and hypothetical violations, Draghi aims to silence all opposition: The solution to the problem of spreads, and therefore too high yields on the sovereign debt of some Eurozone countries, Draghi specified "falls within within the mandate of the ECB, to the extent that the level of these risk premiums prevents the correct transmission of monetary policy decisions” taken by the Central Bank. And now all eyes are on the ECB council meeting in early August.
The Btp-bund spread triggered a decisive drop below 500 points to close around 473 and a yield of 6,05%. The Bono-bund spread drops to 560 from 618. Today Italy placed all 2,5 billion euros of Ctz in May 2014, recording sustained demand but rates slightly up from 4,86% to 4,712%. The Bot auction is expected tomorrow and the 5- and XNUMX-year BTPs on Monday.
The euro rears its head against the dollar at 1,2292 and oil climbs back to 89,52.
Milan flies by 5,62% to 13.210 points, Madrid +6%. The gains of the other European markets were more contained: Frankfurt +2,75%, Paris +4,07%, London +1,36%. Positive indices on Wall Street too, albeit with limited increases: the Dow Jones rises by 1,25% and the Nasdaq by 0,83%. The United States archived a positive surprise on the initial requests for US employment subsidies which dropped last week to the lowest levels (353 thousand) for four years and orders for durable goods up 1,6% (to 221,63 billion dollars) against +0,6% expected by analysts.
On the Greek front, a new 11,7 billion package of cuts was agreed between Athens and the Troika while just today the investment bank Citi released a report in which it increased the probability that Greece will leave the euros in the next 90-12 months. The Greek stock market closed down by 18%.
