Italy's economy may be Greece’s twin brother

Daily Analysis - 09/10/2018

It’s possible for Italy to become the next Greece


Italian administration bonds are now treated as riskier investments due to the anti-establishment Cabinet and its government spending programs. That fact made the Italian bonds with a comparable risk as Greece's. The yield on the 10-year Italian government bond is now at 3.58% which is the greatest level in over 5 years. The interest rate on a bond that is essentially a piece of a paper which, in this case, a government can sell it to gather money and designates the perception that investors may have, regarding the specific investment. For example, if the interest rate on a bond is raising that could recommend that investors are connecting further risk with the specific bond and, consequently are requiring a greater rate of interest in return for their investment. If we compare the Italian 10-year bond to other government bonds in EU, only Greece has a greater yield. Greece's interest rate on the 10-year bond is at 4.64%. Now the equivalent yields in Spain and   Portugal are at 1.59% and 1.95%, respectively.

British banks cloud take advantage US-China trade war

UK banks may profit while the US and China exchange trade tariffs, like candies according to one of the world's biggest banks. If American banks would suffer due to decreased market access to China because of the escalating trade tensions, Gerry Grimstone, chairman of Barclays Bank PLC, said: "I hate to say so but I think its right." If China targets U.S. banks in that way, British institutions may have an advantage over their American competitors in the world's second-largest economy, At the annual Barclays Asia Forum in Singapore Grimstone reported to CNBC "I was speaking at a forum earlier this year and they [the Chinese] put the Goldman Sachs chairman in a hotel as far as possible away from the conference location ... So in little ways like that, China makes their displeasure known."


Gold inches up

On Tuesday Asian shares hit more than a year low while China let its currency slide beyond a psychological support amid losses in domestic share markets. That was a shift that creates pressure over other emerging currencies and depreciates them making them not competitive for the time being. Early today Gold prices went higher attracting some safe-haven requests from non-risky investors while Asian stocks went down due to concerns over a possible slowdown in China's economic growth and while the Greenback eased versus the popular Japanese yen. Spot gold went up 0.3% at $1,190.60 an ounce. On Monday, went down 1.2 %, and that was its biggest one-day percentage drop since mid Aug.

U.S. gold futures rose 0.5 percent to $1,194.40 an ounce.


Oil prices went up due to Iran

In the first week of October, Iran's crude exports dropped further, according to tanker data and an industry source, while consumers are trying alternatives before the U.S. penalties start on Nov. 4. That creates a challenge to other OPEC oil producers as they try to cover the shortfall.

On Tuesday Oil prices went up while more proof appeared that crude exports from Iran, are failing in fear of U.S. penalties and as a hurricane moved across the Gulf of Mexico.

On Monday Brent crude was up 26 cents, 0.3%, at $84.17 a barrel, Brent dropped to a low of $82.66 but essentially recovered while investors bet China's economic stimulus would increase the request for crude. Brent climbed to a four-year high of $86.74 last week.


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