Markets in tension: BTP-Bund spread at 118.5, oil above 100 dollars and rising yields

Markets in the storm, starting with government bonds, while oil starts to grow again and Brent exceeds 100 dollars a barrel again. Nervousness over the explosion of public debts, starting with that of the United States, and fears about inflation due to the increase in energy prices from the crisis in the Middle East are pushing investors to position themselves already discounting new interventions by the Fed and the ECB on rates. Thus the yields of government bonds are rising and in Europe the most indebted countries such as Italy and France are paying the price. The spread between BTPs and Bunds soars to 118.5 points and the stock markets are also affected, starting with Milan which is in the black at the end of the day with a decline of 2.2 percent. The Wall Street indices are declining, albeit slightly, where the good performance of the Nasdaq technology indices is soon canceled out by the ISM manufacturing index, which fell more than expected, while we await the American labor market data due out on Friday. Bets on further rate hikes by central banks first pushed thirty-year treasuries, followed by yields on ten-year T-Bonds which reached their highest levels since 2002.

Movement not very different from that recorded by the United Kingdom's thirty-year Gilt which jumped to 6% for the first time since 1998, the only one so far among industrialized countries to have reached a similar threshold. But it is now widely believed among analysts that US government bonds with a 10-year maturity could also reach those levels. Moreover, the ten-year Treasury, although it then fell during the session, is now settled above 5.2% (the English one at 5.3%). In Italy, the BTP yield continued to increase to 4.69%, still at the highest since the end of 2023, with an increase in a single session of 7.8 basis points, surpassed only by the French Oat (at 4.91%). Just today, the Transalpine government presented the financial measure with the effect of fueling fears about the ability, not only of Paris, to be able to keep public accounts under control. The purchases instead rewarded the German Bund, with the yield decreasing to 3.5%, which has once again become considered a safe haven for investors. However, it was above all oil that weighed on the bond market, with Brent which once again went above the threshold of 100 dollars a barrel and then extended above 101, marking an increase of more than 3%. What is making traders nervous is the lack of signs of a solution in the Middle East.

The pressure on yields and the weakness of government bonds are the inevitable consequence of crude oil fluctuations, even more so if the geopolitical picture is seen as worsening. Energy price pressures on inflation are inevitable and central banks, led by the Fed and ECB, must keep them at bay by raising rates and further pushing yields. And they go hand in hand with the growing concern about public debts which require countries to issue bonds to refinance them with yields inevitably destined to rise. and the problem affects the United States as well as the eurozone. The final bulletin for the stock markets, behind Milan which was weighed down by the many banking stocks occupying Piazza Affari, saw Madrid lose 2.17%, London 1.68%, Paris 1.62% and Frankfurt 1.03%. On Wall Street, Micron Technology's good forecasts failed to provide support even to the Nasdaq, even though on the stock exchanges of the Old Continent it helped chip producers such as STM which moved against the trend.