(Finance) – The prospect of more aggressive actions by the ECB and of Federal Reserve it has sunk the stock markets.
The European Central Bank has sanctioned the end of the Quantitative Easing plan starting next July 1st and a rate hike 25 basis points at the next meeting on 21 July. Other monetary tightenings will follow, but there‘Eurotower has disappointed expectations of an anti-spread shield, that is, support for the government bonds of peripheral countries, such as Italy. To suffer the most were the Italian bank stocks, victims of the spread BTP-Bund: the spread has approached the dangerous threshold of 250 basis points, against ten-year BTP rates over 3.6%.
Investors’ hopes were knocked out by the data on American inflation which, in May, has not yet reached the peak hoped for by the markets and, this, feeds the expectations that the US central bank will be forced to enact more aggressive monetary tightenings.
10-year Treasury rates rose more than 3%, but the development of two-year Treasury rates, more sensitive to the Fed’s monetary policy decisions, was up by almost 3 percentage points.