The story of what happened yesterday in Canberra, when representatives of the Australian Treasury examined the bids for the bonds at auction, can help explain the markets' hunger for more attractive debt securities. The entire lot of 800 million dollars (534 million euros) was awarded to a single buyer, whose identity has not been revealed. But this is not due to the absence of demand: 42 potential buyers, for an amount four times higher than the offer, have remained dry-mouthed, such is the hunger for the offer of 12-year bonds at yields rising to 2,72 .1,3%. The race for bond yields was also at the origin of a sharp fall in the Sydney Stock Exchange, down by XNUMX%.
Australia is a good example of the mood of the markets after the upward signals coming from the minutes of the last meetings of the Fed and the ECB: in particular, yesterday it was confirmed that in the meeting of 8 June, the Frankfurt management already discussed the removal, from his monetary policy message, of the commitment to extend or prolong the bond purchase program if necessary. This signal, albeit tempered by the reminder of the need for "continuous caution in communication", was enough to trigger the rise in yields on Bunds and BTPs. Thus we enter the heart of summer, the favorable season for ambushes on the markets. The first test will take place this afternoon, with data on the US labor market, one of the most followed indicators by the US bank.
US DUTIES ON STEEL? THE EU WILL PUNISH THE BOURBON
Against this backdrop, the markets are preparing to follow the start of the G20 in Hamburg where, among other things, the first meeting between Vladimir Putin and Donald Trump is scheduled. Meanwhile, the European Union, after signing the trade agreement with Japan, has finalized the list of retaliation against Washington if steel tariffs are raised. Brussels will react by tightening duties on bourbon, US whisky, orange juice and dairy products.
JAPAN DOWN, NASDAQ LOSES ONE POINT
Interest rate news from the US and Frankfurt conditioned the Asian session. In Tokyo, the Nikkei index is starting to close down by 0,6%, Seoul and Hong Kong are also weak (-0,3%).
Sharp decline in US price lists, also conditioned by the slowdown in employment in the private sector: only 158 new jobs in June against a forecast of 185. Both the Dow Jones index (-0,7%) and the S&P500 (-0,9%) fell. The Nasdaq is down 1%. The yield on the 30-year Treasury Bill rose to 2,90% from 2,85% a day earlier, the largest one-day move in two months. Yield on 10-year Treasury Bill at 2,38%, highest in eight weeks.
TESLA BRAKES, GM COUNTERPASS
Tesla dropped 7% yesterday (in addition to -7,5% yesterday) after the Model S model did not get the highest mark in some tests conducted by the Insurance Institute for Highway Safety. The capitalization of Elon Musk's company (50,6 billion dollars) was thus overtaken by GM: (52,6 billion).
General Electric, the Dow's worst stock, lost 3,80%: the EU accuses the giant of having provided false information on the occasion of a deal. Intel lost 2,1%.
OIL STILL DOWN, ONLY MILAN RISES IN EUROPE
The decline in US oil inventories was not enough to curb the decline in crude oil: Brent fell to 47,45 dollars, Wti below 45 dollars. Eni down in Piazza Affari (-0,6%): the news that Bernstein drastically cut the target price to 15 euros from 19 euros weighed on the stock, while maintaining the Outperform recommendation. Tenaris -0,8%, Saipem -0,3%.
European stocks in the red on the back of the negative opening of Wall Street. Once again the exception was Milan (+0,66%), the Ftse Mib index at 21.084: the rise in yields depresses the European markets but gives impetus to the banks, supporting Piazza Affari against the trend. London lost 0,41%, Frankfurt fell 0,56% and Paris 0,53%. Madrid lost 0,24%.
BTPs SPREAD TO 2,27%, TREASURY EXCHANGES TODAY
From the minutes published today it emerged that at its meeting on 8 June the ECB opened the door to the elimination, from its monetary policy message, of the commitment to extend or prolong the securities purchase programme, if necessary. The news had an effect on the euro, which appreciated by 0,48% against the dollar, to 1,14. “The minutes suggest that the Frankfurt institute is preparing for tapering, ie the reduction of the pace of monthly asset purchases, albeit very gradually”.
The Italian secondary amplified the decline at the end, aligning itself with the rest of the European sector. The yield differential between the BTP and the Bund on the 10-year segment stood at 171 points (from 167), the highest since mid-June. In parallel, the 2,27-year rate rose to 2,16%, from 3,41% at the last close. The thirty-year bond went as high as XNUMX%, also in this case the highest since the beginning of June.
Also weighing on the Italian paper is the third exchange operation since the beginning of the year. Today the Treasury offers up to 2 billion euros of the February 2033 BTP, withdrawing four BTPs and a CCTEU with maturities between April 2018 and September 2019.
Yesterday evening the February 2033 BTP traded at 136,523, from 139,027 at yesterday's close, with a yield of 2,851% from 2,687% at the end of yesterday's session. Italian paper was further weighed down by placements in Spain (4,3 billion) and France (5,5 billion in the medium and long term).
BANKS AT HIGHEST SINCE MARCH 2016 TOWING UNICREDIT
The increase in market yields gave a further shock to the banking sector. The FTSE index of the Italian banking sector (+1,8%) reached levels it had not seen since March 2016 at 11.723 points. The Eurostoxx index for the sector rose by 1,3%. Even German Finance Minister Wolfgang Schaeuble said yesterday that the Italian banking system is heading in the right direction.
In fact, the progress of the decree for the rescue of the Veneto banks is also favoring the increase, which is moving towards a vote of confidence, after the raising of shields by the M5S. Furthermore, the solution shared with the European Authorities of the crises of Mps and the Veneto banks should at least ease the pressure of speculation on our sector in the coming months.
It was Unicredit who pulled the sprint which in the final reached the new highs of the last 15 months at 17,50 euros. Intesa +0,7%, Banco Bpm +3,5%, Ubi +1%.
Good rise also for insurance companies: Generali +2,1%, Unipol +0,8% and UnipolSai +1%. In asset management, Banca General gained 2%, Fineco +2%.
Mediobanca wiped out the morning's losses, closing up at 8,85 euros. The Board of Directors of the Piazzetta Cuccia group met on Wednesday afternoon to define the numbers of the budget for the 2017-18 financial year, which officially began on 1 July, based on the preliminary balance of the fiscal year that has just ended, whose accounts are good and in line with expectations.
Banca Carige deserves a separate note: +0,24% at the end of a fluctuating session which also led the stock to gain 6% after rallying by 34% in the last week from its historic lows. Yesterday the bank announced that it had sold bad loans for 938 million at a price equal to 33%.
The process for the sale of Veneto Banca's controlling stake in Banca Intermobiiare has officially begun.
AUTO: FRANCE WILL BANN PETROL FROM 2040. LANDI RENZO +10%
A revolutionary future for the car takes shape. After the announcement of Volvo, which from 2019 will produce only hybrid and electric cars, yesterday it was France that made a change in the sector: Paris intends to ban the sale of petrol and diesel cars "by 2040". This was stated by the French Environment Minister, Nicolas Hulot, proposing this objective also at the European level. The measure, he added, provides for "a transition premium" that has not yet been defined.
The goal is certainly remote, but not too far, if adequate environmental incentives are triggered. The novelty helps explain the liveliness of the sector, one of the brightest in the Old Continent. Brembo flies to Milan +4,5% with volumes well above the average. Landi Renzo is doing even better (+9,8%), one of the veteran alternatives to petrol and diesel. Fiat Chrysler advances (+0,83%). Volkswagen is also on the rise (+1,81%).
ENEL HALLS WITH BERKELEY, MEDIASET DEALS WITH SKY
Positive Enel (+0,2%). The group has signed a two-year agreement with Amber Kinetics, a US start-up born at the University of Berkeley which has developed a new energy storage system. Enel will test the technology to identify large-scale commercial applications.
The other utilities are under pressure, suffering from a climate of stiffening in the cost of money: A2A loses 1,4%, Terna 0,7% and, outside the main basket, Iren loses 1,3% and Hera 2,3 .XNUMX%.
Mediaset lost 0,9% It would be willing to sell the rights to next season's Champions League matches to Sky but at the moment no real negotiations are underway, said the vice president and CEO Pier Silvio Berlusconi. Telecom Italia +0,3%.
Sias gains almost 2% after yesterday the Italian government reached an agreement in principle with the European authorities for the extension of some motorway concessions in exchange for investments.
