Read our market review and find out all about our theme of the week in MyStratWeekly with our experts Stéphane Déo, Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.
This week :

Topic of the week: The market, too complacent about Italy?

  • This is our last weekly before a break month. The next issue is on September 5. In the meantime, we wish you all a great holiday;
  • Italian assets suffered with the resignation of Draghi and the return of political risk: broader sovereign spreads and underperforming stock exchanges;
  • A closer analysis shows that the specific risk of the Italian elections is, paradoxically, very little taken into account by the markets. In case of a bad surprise (a poll, an untimely announcement of a policy, etc.), the risk is that Italian assets will suffer much more.

Market review: Should we buy the recession?

  • The ECB raises rates by 50 bp, first hike since 2011;
  • The ECB launches a new crisis tool (TPI);
  • Political crisis in Italy: elections scheduled on September 25;
  • Extreme volatility in bond complex, risky assets bounce.

Chart of the week

The ECB surprised with a 50 bps rise last week. Paradoxically, after this bullish surprise, markets are anticipating a lower end-of-year landing.
The aggressive attitude of the ECB but also the very disappointing surveys, especially the PMIs, are driving up recession expectations.
As a result, expectations of rate increases for next year have dropped significantly. In mid-June, the market was expecting five rate hikes in 2023, and we are now only up half a hike.

Figure of the week

30% of the countries in the EMBIG index are in “distress”, i.e. with a spread over 1,000 bp.
This is an unusually high proportion, unseen since the 2009 crisis.

MyStratWeekly : Market views and strategy

Download Download MyStratWeekly - July 25th 2022
  • Stéphane Déo

    Stéphane Déo

    Head of markets strategy

  • Axel Botte

    Axel Botte

    Global strategist

  • Zouhoure Bousbih

    Zouhoure Bousbih

    Emerging countries strategist

  • Aline Goupil-Raguénès

    Aline Goupil-Raguénès

    Developed countries strategist

The podcast

Every Wednesday, tune in to the podcast by our Head of Markets Strategy Stéphane Déo for a market update and some insight into a theme of the moment.
This week:

  • ECB, Fed;
  • Leading indicators;
  • Back to Italy.

MyStratWeekly ThePodcast

Download Dowload the Podcast slides