In the ECB Day After the BTP rates and the BTP-Bund spread continue to flare up and, while talking about Mes and Greecethe news coming from the Italian markets is that yields on 10-year government bonds leap to the point of exceeding the ten-year Greek ones.
To be precise, 10-year BTP rates shot up to 4.33%with a jump of about 20 basis points, over 4.29% of 10-year rates in Greece.
There is the effect of the ECB which, with its determination to start thinning out its rich portfolio of sovereign debt purchased with QE-Quantitative easing, is preparing to be less generous with Italy (but not only with Italy).
And there are the controversies that have exploded in the arena of Italian politics, with Defense Minister Guido Crosetto which thunders against the decision of the ECB led by Lagarde to raise rates and also to launch the QT-Quantitative Tightening. Referring, of course, also to the hot topic of these days: that of the Mes, the reform of which has not yet been ratified by Italy.
The Minister of the Interior also increases the dose Antonio Tajani:
“I agree with Crosetto. Without prejudice to the independence of the ECB, it was not positive for Europe and for the real Italian economy to raise interest rates”.
And that the macroeconomic front has confirmed the scourge of Italian inflationwith the national consumer price index for the whole community (NIC) soaring by 11.8% on an annual basis in November – stable compared to October but still dramatically high – for some members of the Meloni government it seems to be almost a detail.
The photograph provided by Istat is that of an inflation that remains stubbornly on the record since 1984.
But it doesn’t seem to scare some exponents of the Meloni government.
Indeed, Crosetto relaunches the criticism against the ECB which, in the last few hours, had confined itself to sarcasm, where it had spoken of Lagarde’s Christmas gift to Italyflanked by the leader of the League and Minister of Infrastructure Matteo Salvini, who had almost shouted at the scandal:
“It is incredible, disconcerting and worrying that while there is a government that is doing everything to increase salaries and pensions and cut taxes, the ECB, on an afternoon in mid-December, approves a rule that burns billions of euros of savings in Italy and all over Europe making the spread jump”.
Spread fever, BTP rates higher than Greek bonds
In the last few hours, the defense minister has returned to accuse Frankfurt, stating that the “problem” of the statements that were uttered by the number one of the Eurotower, yesterday, is that they have “effect on the future Italian debt”.
Crosetto spoke during a speech at the Decennial of Fratelli d’Italia, also claiming the fact of to have been the only one who didn’t vote for the Mes.
The high tension is reflected in the Made in Italy government bond market. The spread and rates on BTPs had already shot up since yesterday, after the ECB announcements, even surpassing those of Greece: today, spreads and rates have continued to run, with ten-year yields even jumping beyond the 4.3% threshold.
It is probable that, in addition to the ECB’s moves, the markets are pricing in the tensions that have exploded between the Italy of the Meloni government and the European authoritiesamong other things in times of budget law.
Already before the announcement QT by the ECB, an article published sull’FT-Financial Times da Martin Arnold had made no secret of his concerns for Italy, in particular for its public debt and, in the wake of the withdrawal of the Italy-saving measures, for the effect that the rate increase would have on the costs of debt financing and therefore on interest expenses.
In a graph, the British newspaper had summarized the flare up of BTP rates during this year.
And Rampelli calls Lagarde ‘La Garbe’
A lunge against the ECB which asks Italy to ratify the Mes has also been launched in the last few hours by vice president of the Chamber of Deputies Fabio Rampelli of Fratelli d’Italia in a speech at Coffee Break:
“We are not accustomed to letting Lagarde put our feet on our heads, a sort of trap for Italy”
“Everyone expected an increase in the cost of money, a discounted rebound from the Federal Reserve’s decisions a few days ago. But the violent statements in the margins of Mrs ‘Le Garbe’ (to use a euphemism) are incomprehensible, threatening and with devastating effects, as can be seen from the collapse of the stock exchanges and the soaring spread. The announcement of the block on purchases of government bonds since March was the incongruous and suspicious news”.
Yet Rampelli of Fratelli d’Italia:
“It is not possible to support the real economy with the right hand and to launch the Pnrr and with the left hand to stiffen the positions of the ECB to the point of nullifying it. What game is it? Or maybe you are trying to tell Italy that must approve the Mes at any cost because otherwise these will be the consequences, in the way Greece was already punished years ago?”.