It may have been the collapse of the government bonds, rather than that of the bag, the alarm bell that made Trump change his mind, pushing him to suspend mutual duties for three months. The earthquake in the bag of the last few days had in fact expanded to the Treasuries by sending them to the beaten, with a leap of the returns that, if he left the German Bund unscathed, drags the Italian BTPs with him thus sketching the spread to 130. Scott Bessentthe US Treasury Secretary ensures that everything is regular and that it is finally the time of Main Street rather than Wall Street. And he urges China not to devalue Yuan, as Beijing has been doing for days.
Larry Summerseconomist and former secretary of the treasure, speaks of a “truly unusual” situation with an escape of the markets from investments in the USA capable of triggering “spirals of all kinds”: the only way out would be “that the president back marches”. It is what happened and it is the measure of how high the risks on the Treasuries market were. Until a few days ago the instability had rewarded the safe refuge of the US bonds, assets including the dollar, with the euro to a 1.11 dollar breath. Other the racing of funds to find liquidity.
Trump’s back wire and the auction that went well today out of 39 billion of ten -year titles mitigate the situation, With the bonds, however, that maintain return to approximately 4.30%. Before Trump’s last decision, the impact on Europe, where the debt of France, Spain and more than the others of Italy suffers from the BTP, which reaches the 4% and the spread to a maximum of 134: only a month ago was at 110, a situation that is on the table of the central bankers, is inevitable. If the Fed risks having the hands linked by the pressure of the duties on prices, the ECB seems increasingly determined to cut the rates in the meeting of April 17th. The president Christine Lagardehowever, today received Zhou Yu, High manager of Banca Popolare di China in a “regular” meeting but which arrives among the chaos of the duties: the Bank of England goes to say that the country’s financial stability is “at risk”, a red alarm. For the ECB council it is urgent to take stock: the Spanish governor José Luis Escrivá He says that “some of the negative scenarios that we had identified are being scored”. Words referring to duties and economics, but also to the markets and bonds in particular, where the ECB in the event of emergencies would have available the ‘TPì, a stabilization tool launched in 2022 but never used. In the background, for Frankfurt, there is the geopolitical challenge launched by Trump’s embrace in the Crypto world, and to Stablecoin as a potential tool for supporting the dollar. In tandem with an executive order that affects the digital coins of central bank and the digital euro the ECB works.
From the Eurosystem (ECB more central banks of the euro area) transpires a higher urgency than ever to go on: there is a need to ensure a European ‘monetary sovereignty’ in a moment of very high geopolitical tensions. Equipping with an alternative continental system to electronic payments that today all pass through the USA platforms such as Visa, Mastercard, Paypal or Chinese as Alipay. And therefore they could become, tomorrow, the subject of retaliation such as duties. An ‘divorce’ full of unknowns for the global monetary system between the ECB on the one hand, with its digital euro project, and on the other the US that focus on Crypto and Stablecoin, which according to European central bankers are at high risk.