Markets tested by banks, eyes on EU inflation. ECB, De Guindos: possible credit crunch

A classic “fastened belts” reopening is announced for the financial markets, which on Friday went into fibrillation targeting Deutsche Bank this time, after the crises in rapid succession of SVB in the USA and Credit Suisse which started a turbulent phase for the banks. The wait is to see if the volatility stars will continue or if the situation will stabilize again, as it seemed to be happening before the “irrational” sales (copyright by Citi analysts) on the German giant started.

The impact of interest rates and crises on the real economy

The vice president of the European Central Bank spoke about the banking crisis and possible effects on the real economy of the Eurozone in a long interview with the Business Post, relaunched by the ECB website Louis de Guindos. In an indirect response to the pressing request, especially from the Italian side, to be cautious with rate hikes, de Guindos reiterated the position adopted by the Governing Board after the last 50 basis point hike in March and in particular that “now there is this added element of uncertainty arising from financial sector problems in the US and Switzerland. And we will adopt a meeting-by-meeting approach where decisions are made. We do not commit to any action in advance.” As for the impacts of the financial turbulence related to the crisis of Svb and Credit Suisse, “the question now is” how these “will impact the Eurozone economy. In the coming weeks and months we must assess whether they will give rise to a further tightening of the terms of financing”. The Spanish central banker then confirmed the goal of a “timely return to 2% inflation. We know it can’t be tomorrow, but it must be within our forecast horizon, which is a two-year period”.

At1, what are the bonds that make the markets tremble. In Italy 18 billion, almost all of Intesa Sanpaolo and Unicredit

by Andrea Greco

March 25, 2023

The moves of the ECB and the euro towards 1.1 dollars

If the ECB’s approach will be meeting by meeting and based on data, the publication of European inflation scheduled for next Friday takes on even more centrality. The expectation is for a slowdown to 7.1%, from the previous 8.5%, thanks above all to the reduction in energy prices, while the ‘core’ component is expected to rise slightly, to the record level of 5.7%, from 5.6% in January. Bloomberg notes how so far the positions of Christine Lagarde, who remarked that the ECB will not deviate from the objective of cooling down the price race, have marked a distance between Frankfurt and the other main western central banks, the Fed and the BoE, which are taking more soft. Without forgetting that they are ahead of the Eurotower in the cycles of increases, this still poses a theme of strengthening the euro against other currencies. The financial agency cites Citi, SocGen and Deutsceh Bank who estimate that the single currency could move towards 1.1 dollars in the coming months: precisely this week’s inflation reading could force the ECB to continue to raise the cost of money well beyond the Fed’s horizon, adding upward pressure on the euro.

The agenda of the week

In addition to the inflation numbers, investors then look at the Ifo index, on the confidence of German entrepreneurs. In the US, the most important data will be Tuesday on consumer confidence, expected to drop for the third consecutive month. Finally, the manufacturing and services PMIs in China will be published on Friday, both expected to slow down but still expand (over 50 points). On the central bank front, the interventions of various bankers will continue, especially the ECB, including Isabel Schnabel (Monday) and Christine Lagarde in Florence (Friday). Also on the agenda are some speeches by Fed members. Here are the main events on the Agi agenda:

MONDAY MARCH 27
– China: industry profits in February – Germany: Ifo trust German entrepreneurs in March – ECB: Isabel Schnabel speaks at the event Program for Economic Research, SGH Macro Advisors and Richard Paul Richman Center at Columbia University
– ECB: Centeno takes part in the Omfif event – Confindustria: Assembly of Confindustria Alto Adriatico “The world that will be”, with Minister Giorgetti and Carlo Bonomi.
– Trenitalia: presents the new Frecciarossa livery for the centenary of the Italian Air Force. Participates, among others, Luigi Corradi, CEO of Trenitalia.
– Council of State: presentation of the commemorative stamp of President Franco Frattini and naming of the hall of the IV section of the CDS “Aula Franco Frattini”.
Taking part, among others, Adolfo Urso, Minister of Enterprise and Made in Italy; Luigi Maruotti, president of the Council of State.

TUESDAY 28 MARCH
– France: business confidence in March
– Istat: consumer and business confidence in March – Government Bonds: Btp auction
– ECB: Andrea Enria speaking at the annual conference on banking supervision organized by Handelsblatt – Usa: house price index in January
– Usa: consumer confidence in March
– Fit Cisl: Nico Piras “It’s Been Me” competition, together against the mistreatment of public transport, with the Deputy Minister of Infrastructure and Transport, Edoardo Rixi, and the Cisl Secretary General, Luigi Sbarra.
– Confcommercio: National “Legality we like it!” Day, with the president of Confcommercio Carlo Sangalli and the Minister of the Interior Matteo Piantedosi.
– House: Presentation of the agreement between the Consorzio Cooperative Lavoratori (Ccl) and Coima for the activity of fair and social housing in compliance with the mutual-cooperative principle, with Minister Matteo Salvini.
– Court of Auditors: presentation of the 2023 half-yearly report on the Pnrr
– Bri: Christine Lagarde speaks at the opening ceremony of the Innovation Hub Eurosystem Center of the Bank for International Settlements.
– Chamber: Transport Committee – hearing of the Deputy Minister of Infrastructure and Transport, Edoardo Rixi, in the context of the examination, in the context of reports to Parliament, of the program contracts stipulated by the Ministry of Infrastructure and Transport with the company Rete Ferroviaria Italiana SpA for the regulatory period 2022-2026
– Chamber: Productive Activities Commission – informal hearing, by videoconference, of representatives of Enel Spa on the prospects for development in the sites affected by decarbonisation and the production of electricity with particular reference to Brindisi and Civitavecchia; fact-finding survey on Made in Italy: enhancement and development of the Italian company in its various production areas.
– Centenary of the Air Force: with Minister Giorgetti.

WEDNESDAY 29 MARCH
– Germany: Gfk consumer confidence in April – France: consumer confidence in March
– Istat: foreign trade outside the EU in February – Usa: pending house sales in February – Usa: weekly oil inventories
– ECB: Schnabel intervention
– Energy: XXIV Master Safe Back to the Future, shaping the new energy ecosystems opening ceremony, with Stefano Besseghini president of Arera, Francesco Starace at Enel.
– Confapi: “75 years of big business, building the future together” with Cristian Camisa, Confederal President of Confapi, Tajani, Minister of Foreign Affairs, Urso, Minister of Enterprise, Salvini, Minister of Infrastructure.
– Auto: Federmeccanica, Fim-Cisl, Fiom-Cgil, Uilm-Uil present the comparative study on the Automotive industry in Europe, with the contribution of Anfia on the sector industry in Italy.
– Mimit: Pharmaceutical and Biomedical Table, with the Minister of Enterprise Urso and Health Schillaci.
– Welfare: Legality and solidarity: rights and ethics for a modern welfare with Pasquale Tridico.
– Senate: Abi hearing on the proposal of the EP regulation and of the council to amend the EU regulation on instant bank transfers in euro. Follow-up of the fact-finding survey on tax incentive instruments with particular reference to tax credits: hearing of representatives of Cna (National Confederation of Craftsmen), Confindustria, Casartigiani, Federpesca and Confagricoltura; representatives of Confcommercio, Confartigianato, Confimi Industria, Alliance of Italian Cooperatives, Confapi.
– Chamber: Budget commission – hearing of representatives of the Bank of Italy in the context of the fact-finding investigation on the macroeconomic and public finance effects deriving from tax incentives in the building sector.

THURSDAY MARCH 30
– Istat: employed and unemployed in February – Istat: production prices for industry and construction in February – Spain: inflation in March
– Germany: inflation in March
– Eurozone: consumer confidence in March
– Usa: weekly unemployment benefits – ECB: monthly bulletin
– Consob: the arbitrator for financial disputes (Acf), a body set up within Consob for the out-of-court settlement of disputes between savers and intermediaries, presents the annual report for 2022.
– Finance: Rome Investment Forum organized by FeBAF, with the European Commissioner for the Economy, Paolo Gentiloni, the presidents of Abi, Ania and Aifi, respectively Antonio Patuelli, Maria Bianca Farina and Innocenzo Cipolletta; the Minister for European Affairs, for Cohesion Policies and for the Pnrr, Raffaele Fitto.
– CDP: presentation of the 2022 Results.
– Poste: Presentation of 2022 results, guidance and new business plan.

FRIDAY MARCH 31st
– China: manufacturing PMI in March
– Germany: February retail sales – Germany: March unemployment rate – France: March inflation estimate
– Istat: industry turnover in January
– Istat: inflation estimate in March
– Eurozone: inflation in March
– Eurozone: unemployment rate in February – Usa: personal expenses in February
– Use: Pce in February
– Prometeia: report on the persistence of inflation.
– ECB: Christine Lagarde participates in the event with students “New meetings for the future” organized by the Osservatorio Permanente Giovani-Editori in Florence.