The market of the American public debt sends to investors (which and so tightened the US policy) ambiguous signals. The yield of US state bondings alternately grows and falls. The reasons for the multidirectional dynamics are many: on the one hand, new vaccines against COVID-19 show positive results, and the dynamics of GDP corresponds to expectations that strengthens the demand for risky assets; On the other hand, Republican Senators offer to cut a package of stimulating measures by a volume of 1.9 trillion dollars (offered by the Biden administration) to one third of this amount.
In the meantime, Europe is spoken by disputes regarding the production and distribution of vaccines, which once again demonstrates how far the European ministry is far from the real political union, movable solidarity. The boundaries open and closed as countries are trying to prevent the penetration of various coronavirus strains into their territory.
To top item, Italy is experiencing another political crisis. Prime Minister Giuseppe Conte resigned after his former ally Matteo Renzi brought his little batch from the ruling coalition, having deprived the confount of the majority in parliament.
Conte wants to try to restore the Alliance and achieve most of the early elections, but investors are skeptical. As a result, the yield of Italian bonds grew to the moment of the emergence of rumors that the former President of the European Central Bank Mario Dragi may lead the new government, which strengthened the Italian State Dolg.
European policy and evaluation of US government borrowings are heated volatility
Greece has strengthened its position by placing 10-year-old bonds with the lowest yield since Athens joined the euro zone in 2001 (about 0.79%). The demand was so high that the auction increased the auction with the initial 2.5 billion to 3 billion, and then at all up to 3.5 billion euros. But even with such an amount, the offer was overlapped more than eight times: the application book was estimated at 29 billion euros.
Germany (the most powerful EU economy) cannot find the successor to Chancellor Angela Merkel, which is already in power for the sixteenth year (its term of office expires in the fall). The Christian-Democratic Union elected the head of the Armina Lasheta party, the Prime Minister of the Hustled Land of North Rhine-Westphalia. However, it does not use special support; The second place was taken by the former Leader of the Friedrich Merz parliament, which adhere to the right views.
The bay may eventually lead the party in the September elections as a candidate for the post of Chancellor, but Marcus Zeeder, Chairman of the Autonomous Bavarian Wing of Christian Democrats, is also ready to fight for the "prize". Candidate of Social Democrats, Minister of Finance Olaf Scholz, was under the fire of criticism due to the largest financial scandal since the war connected with the collapse of the Wirecard payment company; Last week he had to dismiss the head of the supervisory department.
At the beginning of the week, the yield of Italian bonds decreased, while the yield of 10-year-old papers fell about 2 basis points to 0.0622%.
At the end of yesterday's trading, the yield of 10-year-old bonds of Germany increased to -0.511%, so that their spread with similar papers of Italy decreased to 113 points.
The yield of 10-year-old US government bonds dropped below 1.07% on the news on the readiness of President Joseph Biden to meet with moderate Republicans who want to cut the package of incentives. Another pressure factor was the slowdown in production activity in December (the index from ISM fell from 60.5 to 58.7). This combination of drivers strengthened the price of bonds, which are inversely proportional to profitability.
The Ministry of Finance surprised the markets in the second half of Monday, stating that the first quarter of borrowing accounted for only $ 274 billion, which turned out to be less than a quarter of the November assessment of 1127 trillion dollars. In the fourth quarter of 2020, the government spent much less than expected, and at the end of the year he remained retained 1.7 trillion dollars.
The ministry warned that the estimates of borrowing does not include the costs of any incentives adopted by the Congress, so that the actual amount may be higher. However, investors have already begun to take into account the possible slowdown in the growth rate of the public debt, which leads to a decrease in bond yields.
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