Even the fifth day of voting does not give birth to a new president of the Republic. The fifth vote saw yet another black smoke with Elisabetta Casellati, a candidate indicated by the center-right, who failed to approach the quorum of 505 votes, stopping at 382 preferences. Casellati, pushed above all by the Northern League leader Matteo Salvini, did not even reach 400 votes, a threshold set by the coalition to propose it again in the next vote. Even for the sixth vote in progress, nothing is expected. All postponed to next week with the emergence of some smoke signals about the opening of negotiations between the two opposing sides. “A negotiation has opened” with the center-left, ‘let’s see ”, declared in the afternoon the parent company Forza Italia in the Senate, Annamaria Bernini.
On the other hand, via Twitter and Facebook, the leader of the Brothers of Italy, Giorgia Meloni, has once again cried out for early elections. “Italy has only one way to get out of the blockade created by a certain policy: immediate elections to give the nation a government worthy of the name. After the election of the President of the Republic, the word goes back to the Italians, ”Meloni posted.
The spread is flawless
A somewhat tangled situation that does not seem to bother the markets at the moment. From Monday to today, the BTP-Bund Spread has shown no real signs of nervousness, with the only surge coming in mid-week, but due to something else, namely the Federal Reserve and Powell’s hawkish words that have caused yields to soar. government bonds. The spread btp bund it thus remains in the area of 132 basis points, slightly down compared to yesterday and substantially unchanged compared to the levels of a week ago.
Another proof of extreme tranquility about Italy came fromauction Btp today, with strong demand for 5 and 10-year qualifications. In detail, € 3 billion of 5-year BTPs (range 2.5-3 billion) were placed with demand exceeding 4.6 billion. The 5-year BTP expiring in August 2026 was allocated to a yield of 0.50%, up by 31 basis points compared to the November auction. The 10-year BTP yield (maturity June 2032) also increased from 1.03% to 1.39%.
Behind the scenes is the possible winning name
Where does all this tranquility of the markets derive from the uncertainty of the outcome of the match for the Quirinale? If at first glance the scenario appears very difficult to decipher, a more detached look from the contingency of the negotiations of these days can lead to a cold analysis typical of the markets. The inability to find other solutions leads investors to think that the natural outcome of the dispute will be resorting to the same figure that the outgoing president Mattarella called a little less than a year ago to form a new government. In fact, the name of Mario Draghi is the one that according to many is today the most accredited to succeed Mattarella. And as underlined by many business houses these days, it is also probably the most welcome solution to the markets because it would ensure for another 7 years a presence of depth able to act as a guarantor against any new winds of political instability.
And in the last few minutes, agency launches speak of a secret meeting in via Veneto between Salvini and Draghi.
Previously the Bloomberg agency had remarked that next Monday “the search for a successor to President Sergio Mattarella will go on with increasing pressure to put an end to a process that leaves the country in limbo”. The failure of the parties to reach an agreement is seen as an advantage for Prime Minister Mario Draghi, which could benefit from the fact that alternative candidates fail to build consensus. Among the other solutions on which the markets are reasoning there is also that of a second term for Mattarella, which remains an option, even if the outgoing president has repeatedly indicated that he is not interested.
For investors, the main risk is that a political crisis could lead to early elections that would threaten Italy’s ability to carry out reforms and receive over 200 billion euros of European Union funds. And it could bring Mario Draghi out of the scene.
As explained a few days ago by Swiss credit, such a scenario, namely that of a government crisis with early elections, could for example lead to a more prominent role by a Eurosceptic party (Giorgia Meloni’s Brothers of Italy), affecting the political agenda of ‘Italy and the use of EU funds.
However, other dynamics could push up the spread, starting with the moves of the ECB. And in this sense the strategists of Societe Generale indicate the widening BTP / Bund spread in 2022, reaching the 170 basis points area thanks to the normalization of monetary policy by the ECB.