French surge should regain early in 2019 after wild anti-government riots as well as wilting business confidence cut short a previously anticipated year-end revival…
EU watchdogs: there’s no need to worry about Italian banks
European banking watchdogs have ramped up their monitoring of liquidity of Italy’s financial institutions after an abrupt surge in Italy’s government bond gains. However, there’s no cause for worry, as a senior EU source disclosed on Tuesday.
According to the source, the monitoring was conducted more intensely than before because of recent market turmoil.
Eventually the checks covered customer deposits as well as the interbank market, which Italy’s financial institutions utilize to lend to each other without requesting collateral. As a result, the watchdogs didn’t find any sings of alarm.
Both the European Bank and the Bank of Italy refused to comment.
The ECB, in tandem with national watchdogs regularly closely watches lenders' liquidity conditions and also adjusts its monitoring, in particular its depth and frequency, during the periods of stress or big fluctuations.
Evidently, a budget standoff between Italy’s anti-establishment government and EU authorities on Tuesday backed Italy's benchmark 10-year debt costs, pushing it to 3.72%, which is the highest outcome since February 2014.
The previous month the ruling coalition set a deficit objective of about 2.4% of economic output for next year, thus tripling the previous cabinet’s objective for the heavily indebted country, unnerving traders and also provoking sharp criticism from the European Commission.
Italian financial institutions are quite vulnerable to sovereign debt issues due to the fact they hold approximately 375 billion euros of domestic bonds, which accounts for 10% of their assets.
The equities in the country's lenders have headed south abruptly for the last time and the cost of insuring key financial institutions’ debt against a potential default has tacked on.
However, the sufficient liquidity provided by the European Central Bank for the period of ultra-expansionary monetary policy is protecting the interbank market from any tensions, as some financial analysts pointed out.
The Federal Reserve will make its monetary policy statement and announce the official rate on December 19, at 21:00 MT time.
Find out the main market movers for today and the reasons behind the risk-off sentiment!
Safe havens such as gold and Japanese yen declined as investors sentiment was boosted by eased geopolitical tensions…
On Tuesday, the euro tacked on because market participants waited for reports on inflation and growth in the euro zone, while the Japanese yen went down after Japan’s major bank told it would be more flexible in its huge stimulus program…
On Tuesday, the evergreen buck dived because the common currency bounced off and the UK pound managed to ascend to the day’s maximums reacting to reports that British Prime Minister Theresa May is going to take control of Brexit talks…