BTPs wobble: YIELD AT 6,15%, SPREAD AT 522
MERKEL: "AS LONG AS I LIVE, NO EUROBOND"
Dramatic end of session for Italian and Spanish government bonds. The spread with the German bund rises to 460 basis points with the Italian ten-year yield at 6,11%. The Madrid-Berlin gap widens to 525 points with the rate on bonos rising to 6,73%. Angela Merkel took care of the already bad climate in view of the European Council on Thursday and Friday. Pressured by partners, the German chancellor he dictated a grave declaration: “Europe will not have a shared responsibility for public debt as long as I live”.
The reaction on the government bond market was immediate: the yield of the 10-year BTP jumped to 6,15%. Yet, after the Italian and Spanish debt auctions, the European stock exchanges have tried on several occasions to remedy, at least in part, the heavy collapse on Monday. But after a couple of attempts to rebound, the Milan Stock Exchange fell back into negative territory also following the drop in US consumer confidence. The warning of the chief economist and deputy secretary of the OECD, Piercarlo Padoan, who sees a risk of contagion from the Greek crisis for Italy and Spain, also weighs heavily. The Ftse/Mib index – 1,11% within a few minutes it fell back below 13, closing at 12.968. Madrid -1,36% . The situation of the other Stock Exchanges is much less tense: Frankfurt +0,07%, Paris falls by 0,3%. London loses 0,07%. Wall Street is also negative: Dow Jones -0,28%, S&P 500 -0,1%, Nasdaq -0,08%.
This morning the Italian Treasury had placed 3 billion Ctz over two years with a yield of 4,7% from 4,03% in May. Demand was 1,6 times supply. The auction round continues tomorrow with 9 billion semi-annual Bots, while on Thursday up to 5,5 billion will be offered Btp at 5 and 10 years. The increase in yields for Spain was even more marked, placing 3,077 billion euros over three and six months, slightly above the expected range, but with sharply rising interest rates. The yield on securities with a six-month maturity almost tripled, going to 2,363% from the 0,846% of the last issue on 22 May, while the rate on the six-month maturity practically doubled from 1,7387% to 3,237 %.
An extraordinary meeting of finance ministers from France, Germany, Spain and Italy will be held in Paris tonight. On the EU website, Herman van Rompuy has meanwhile published a "lean" version of the four-party proposal (Van Rompuy himself, Barroso, Juncker and Draghi) which will be presented at the Brussels meeting which: banking supervision at European level with 'responsibility' of last resort and powers to the ECB; common mechanisms to manage the 'resolution' of banks and guarantee deposits with the intervention of the ESM anti-crisis fund as 'financial anchor'; integrated Eurozone fiscal policies with agreed debt ceilings; common debt issuance as an 'element of fiscal union'. Former banker Yannis Stournaras has been nominated as the new finance minister in place of Vassilis Rapanos who resigned in the last few hours after being taken seriously ill. Stournaras' appointment was confirmed by official sources of the Greek government.
I bank securities fall back in the final: Unicredit closes at – 3,44%, Intesa defends itself -0,77%, Mediobanca -0,76%, Ubi falls back by 3,33%, Popolare Milano -2,65%. Heavy the thud of MontePaschi -5,27%. The government will subscribe to new financial instruments issued by MPS and similar to Tremonti bonds for a maximum value of 3,9 billion euro, thus helping to build up a capital buffer capable of bringing the Core Tier 30 ratio to 2012%. The Bank of Italy, says a note from Palazzo Chigi, communicated that the capital requirements of MPS to reach the Core Tier 1 target level of 9%, is between 1 and 9 billion". The new subscription will also replace the Tremonti bonds issued by MPS in 1,3 for an amount of 1,7 billion euros.
Sharp drop for A2A -4,78%. In Europe, the best sector is the utilities sector, with the Stoxx index up 1%. Bank of America today released a report underlining that European utilities are undervalued and indicating Terna as one of the best stocks in the sector. Terna drops by 0,5%. On Enel up 0,34%, Bank of America raised its recommendation to “neutral” from “underperform. Telecom Italia +0,42% holds on in positive territory, a few days before the board of directors for the sale of Timedia -2,3%. Oils are also down: Eni falls by 0,1%, Saipem -0,64%. The price of crude oil is stable with WTI at 79,3 dollars a barrel (+0,1%) and Brent at 91,3 dollars. The race to Impregilo deflates -4,3%. The industrialists are volatile with StM now falling by 5,22%. Fiat loses 3,3%, Finmeccanica drops by 3,21%.
