Editorial: The great deal
Finally, great progresses were made on the eurozone sovereign debt crisis front. Stress on financial markets together with shifting public opinions(and mounting pressures from rating agencies…) proved sufficient to push politicians back to boldness. The outcome of the July 21st summit is comprehensive. Financial markets did not welcome it, they cheered it!
Government bond markets eased massively in Greece, and were back to their pre-Italian stress (started on July 8th) levels. The 2-year GGB rate lost more than 400 basis points (from 38% to 33.8%) on Thursday, the decline even gaining momentum on Friday. The 10-year rates eased 26 and 25 bps in Italy and Spain, respectively. The euro bounced back to 1.44 and stock markets jumped (+2.13% for the Euro Stoxx 50) with particularly marked rebounds for financials (+4.6%), especially banks (+5.46%). The adage is that you should buy the rumour and sell the news. This time, it was: buy them both!
Overview: In the euro we trust...
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EcoWeek reflects the view of the Economic Research Department of BNP Paribas. It is published for information purposes only. Neither the information nor the opinion expressed constitutes an offer or solicitation to buy or sell any investments. Information contained herein has been obtained from sources believed to be reliable but BNP Paribas does not guarantee its accuracy or completeness. All opinions and forecasts are subject to change. Discretion with respect to suitability should be prudently exercised.
Offical date: 2011-07-22