Home » Rome-Frankfurt, a hot axis for the markets. From the crisis of the Draghi government a headache for the ECB’s anti-spread shield

Rome-Frankfurt, a hot axis for the markets. From the crisis of the Draghi government a headache for the ECB’s anti-spread shield

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Rome-Frankfurt, a hot axis for the markets.  From the crisis of the Draghi government a headache for the ECB’s anti-spread shield

MILANO – The Rome-Frankfurt axis is the hottest of the week: first the appointment with the fate of Mario Draghi, then the announcement of the ECB on a rate hike and anti-spread shield. Contrary to what the late summer period suggests, it is a week of very high tension for Italy and the financial markets. The crisis of the government led by the former central banker is at the center of the thoughts of the international operators, who for now have reacted with some fibrillation, but all in all expressing the hope that the rupture can return and the path of the executive proceed.

The date circled in red in the operating rooms is now Wednesday 20 July“When Draghi will address the Parliament and could be the key to the future of a possible government – summarize from Mfs Investment Manager – It is plausible that Draghi may he remain prime minister or that a new technical government is installed. In any case, this situation complicates things for the ECB. Overall, therefore, we remain vigilant “on the tightening of spreads” in the short term. “Second Janus Henderson “In the absence of the will to carry the current coalition forward until the originally scheduled deadline of May 2023, we should expect higher BTP yields and widening spreads. However, we do not expect an Italian debt crisis and it is important to note that Investors are in any case prepared for a change of government in 2023 and the exposure to Italian debt is no longer what it was a few years ago, so even in the case of continuity of the government Draghi Spreads are unlikely to tighten significantly. “

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Matteo Ramenghi of Ubs puts on the table another concern of investors, “the Recovery Fund which will be an important driver for the” Italian “economy in the coming years, especially in light of the increase in commodity prices”. Resuming the parallels with the past, Ramenghi excludes that, even in the event of early elections and the affirmation of the most euro-skeptical forces, Italy’s permanence in the single currency is in question: compared to autumn 2014, the percentage of European citizens in favor of the currency municipality rose by 10 points, from 67 to 77%. And in Italy the rating improved even more markedly: +18 points, albeit at a slightly lower absolute value (72%). In addition to the political crisis, the Swiss bank is also looking at the ECB. In addition to the already anticipated 25 basis point hike in the cost of money, the expectation for the anti-spread shield is for a mix of flexibility in the reinvestment program of maturing securities purchased under the anti-pandemic program, without a cap on purchases. to “have credibility in the eyes of the markets”. It is hoped that it will be enough to announce it for it to have its effect, without ever being used. The conditionalities that will in some way be linked to the program should also be considered: “With Italy facing another political upheaval, pressure” on Lagarde “is likely to increase to increase these conditionalities”. Another vicious circle (between credibility for a tool without limits and conditions for accessing it) that is more than a headache for Eurotower.

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During the week they also meet there Pboc, the Central Bank of China, and the Boj, the Bank of Japan. The ECB intervention, on the other hand, comes just as the gas war is getting hotter in Europe. On Monday, Russia announced the 10-day maintenance shutdown of Nord Stream 1, the main pipeline to Germany. The fear is that the fundamental artery will remain stuck indefinitely, with Moscow ready to make the old continent pay for the support provided to Ukraine. An event which the European Union does not want to be caught unprepared for. For this, on Wednesday, the Commission will reveal its own energy emergency plan in the event that Russia does not resume ensuring the flows. Meanwhile, the US quarterly season continues. Major companies expected at the exam desk during the eighth are BoFa, Goldman Sachs, Netflix and Tesla.

Here are the events of the week in the breaking latest news agenda

– Fipe Confcommercio: conference “Contractual dumping in public establishments”.
– Antitrust: Annual report.
– Istat: foreign trade and import prices in May.
– Italy-Algeria: inter-ministerial summit in Algiers.
– Germany: Bundesbank monthly report.
– Usa: quarterly Bofa e Goldman Sachs.

– Istat: production in construction.
– EssilorLuxottica: presentation of the first Smart eyewear Lab at the Politicenico in Milan.
– Cars: meeting of the Pd parliamentary groups with the national secretary, Enrico Letta, and the Minister of Labor, Andrea Orlando.
– Gb: unemployment rate in May.
– Eurozone: inflation in June.
– USA: building permits and new construction sites in June.
– Usa: trimestrale Netflix.

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– Transport: annual report Art.
– Italy-Usa: The transatlantic investment committee: the first italian meeting. Among others, the president of Confindustria, Carlo Bonomi, participates.
– Air transport: “smart airport” conference.
– Cars: Acea data on registrations of alternative fuel vehicles in Europe.
– China: Pboc decision on prime rate.
– Gb: inflation in June.
– Gb: producer prices in June.
– Germany: producer prices in June.
– USA: sale of existing homes in June.
– USA: weekly oil stocks.
– Usa: Tesla quarterly.

– Government: Prime Minister Mario Draghi meets business organizations.
– ECB: steering committee on monetary policy and press conference by the president, Christine Lagarde.
– USA: new applications for weekly unemployment benefits.
– USA: Fed Philadelphia manufacturing index.
– Usa: trimestrali Philip Morris, Snap, America Sirlines, Mattel.

– Istat: building permits in the first quarter.
– Confindustria: Confindustria Imperia assembly with president Carlo Bonomi.
– Bank of Italy: survey on the financial statements of Italian families.
– Gb: retail sales in June.
– Composite SMEs: France, Germany, Eurozone, GB, USA.
– Use: Verizon Quarterly.

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