The markets await the ECB with a new rise in interest on the debt, favored in turn by the rise in oil. The Ibex, after two days of hiatus, activates the brake.
The agenda of the week in the markets already made it clear that the last two days could concentrate the biggest movements. Investors have taken this situation to the extreme. Yesterday the Ibex chained its second transition session, with almost negligible changes. On Tuesday it closed with 0.06% and yesterday with 0.01%.
Today’s session returns full activity to the markets, with an appointment that stands out above the rest, the meeting of the European Central Bank. Analysts await confirmation of the end of the debt purchase program, as a step prior to the start, at the July meeting, of interest rate hikes. During the last few days, especially as a result of the new record in the CPI for the eurozone (8.1%), doubts have intensified about the pace of these increases, and now investment firms do not rule out the July meeting as well or else the one in September ends with a sharper rise in rates, of 50 basis points. Historical inflation figures, as Monex points out, have caused “50 basis points to be the new 25.”
The upward adjustment in monetary policies entails a tightening of financing conditions. Under current conditions, it also implies a growing risk of recession. Aggressive rate hikes would aggravate the anticipated economic slowdown. But central banks have made it clear that their top priority right now is to tackle inflation. Therefore, barring a major surprise, the Federal Reserve will raise its interest rates by another 50 basis points next week.
Fears about growth persist, although the debt market is still driven by the determination of central banks in their fight against inflation. The result is new highs in debt interest. The yield of the German bund reaches 1.35%, and that of the Spanish ten-year bond is close to 2.50% before the end of the ECB’s debt purchase program. On the other side of the Atlantic, in the United States, the interest on the ten-year bond repeats one more day above the 3% barrier.
Next extension.
