The PEPP ditches the FTSE. It seems like a play on words, but behind these acronyms lies the future of millions of Italians, as well as those of Europe. At the Euro Finance Summit, the members of the board of the European Central Bank began to discuss the exit strategy from the Pandemic Emergency Purchase Program. The PEPP is the government bond buyback program, without which the Italian spread would have risen to stratospheric values. Today the yield differential between Italian and German government bonds is around 111 basis points (1.1%). Why is the PEPP so important?
The trend in government bonds, the trend in rates applied to mortgages, that linked to loans, etc. depends on the spread In short, the PEPP, and the date on which it will stop, concerns millions of Italians. When the ordinary plan for the repurchase of government bonds ceases, the spread could undergo severe tensions. That is why the statements coming from the summit regarding the end of the PEPP by the middle of next year create discontent among investors. On this sensational news, the stock exchanges closed all in red, but that of Milan did the worst of all.
This sensational news overwhelms the stock exchanges and crushes Italian banks and Piazza Affari
The Ftse Mib started the session with a rise, on the back of last Friday’s good performance. We talked about the Friday session in this article: “A mountain of billions pushes this title and brings a stock exchange to the record“. But after an hour the prices began to fall, as unfortunately happened other times in the previous weeks. But this time, it was news from the ECB summit that pushed prices down. A premature end of the PEPP worries the financial markets and the market that would have the greatest disadvantages is ours.
This is why at the end of the session the Ftse Mib (INDEX:FTSEMIB) closed down 1.1%. It is not difficult to imagine which stocks we have ballasted the list, this sensational news overwhelms the stock exchanges and crushes Italian banks and Piazza Affari. In fact, among the worst 8 shares of the Ftse Mib, 5 are banks, with heavy drops. BPER Banca sold 3.2%, Unicredit 3.1%, Banca Mediolanum 3%, Banco BPM 2.8%, Intesa Sanpaolo 2.3%.
Deepening
This the multidays analysis and the analysis of international markets by the ProiezionidiBorsa Research Department.
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