Similarly to the global effects of the Federal Reserve’s purchase program between 2008 and 2014, the Quantitative Easing of the ECB is now driving down interest rates of several countries, not only in the Euro Area.
Political communication is a factor that plays a key role in explaining sovereign spread movements. Based on an econometric analysis in the period 2009-2013, we highlight that under Monti’s administration the effect of fiscal policy announcements had a significant impact on the spread between Italian and German 10-year government bond yields. However, Berlusconi's and Letta's cabinets did not achieve this result, suggesting, among other factors, a possible credibility gap between a technocratic government and the political ones.
A flood of oil and a Chinese economy showing increasingly evident signs of weakness: apart from the effects of currency dynamics, these are the key elements of the present scenario in the global commodity markets. While on the one hand the recovery of the world economy progressively consolidates, on the other the prices (in US dollars) of raw materials are on a deflationary trend.
For Italian manufacturing SMEs, access to financing improves in winter months. Signs of activity are also seen in the area of requests for loans, but a strong recovery is needed to take advantage of the best borrowing opportunities.
Though it may appear threatening to Chinese steel manufacturers, an agreement on the prices of iron minerals like the one recently advocated by the president of Fortescue is unlikely to see the light: the history of international cartels is replete with failures – with a single, “brilliant” exception.
The economic crisis has had a deep impact on the Italian employment market. Since 2007, the number of unemployed has more than doubled, reaching a staggering 3.4 million from 1.48 million in 2007. These figures reflect the way in which the different areas of fragility have emerged or worsened as a result of the crisis. When the recovery starts, the key question will be if and how the employment market will reabsorb those who have been out of it the longest.
Stock market investors could face the impact of a return of the oil price to higher levels in the next few months. A strategy based on sectorial diversification can help to hedge this risk but investors could still face large losses.
The average inflation rate in January and February was -0.4%: is there
still a risk of deflation? The euro's depreciation and the signs of recovery
that are starting to emerge seem enough to stave off the risk, but we should
keep a watchful eye on the situation, and in the meantime seize the
opportunities provided by low inflation.
Across Europe metro areas can be compared following a new harmonised definition: our clustering exercise confirms a weak position for Southern Italian cities while only Milan seems to be comparable to London and Paris.