Among the warning signs of new, high cost of borrowing Italy to the highest rate since the country’s use of the single European currency “Euro”. Included with other marks on the pressure, which is currently mobilized on the European banking system. Despite the non-arrival of the pressure to the level it was during the financial crisis, which occurred in 2008, but analysts saw that while some markets completely freeze in the United States, these pressures are increasing enough to provoke a state of anxiety.
Even with the arrival of Greece to the agreement on Sunday on forming a coalition government means to avoid the collapse of the latest plans to save the euro area, the newspaper “The New York Times,” the American edition of the Monday that investors still want to achieve greater certainty about the way that will stick by Europe in relation to the rescue package, which aims to prevent the transmission of financial contagion the Greek to Italy and Spain.
Quoted in this regard for Mark Wskina, a strategic expert, the first offender Montgomery Scott on the transformation of the political leadership in Greece, saying: “This is part of the process side. And will interact markets positively with that, but it will not rebound sharply with the news. The biggest issue Now the problem are those related to the Italian. ”
, The newspaper pointed out that the credit markets in the United States was in a state of pressure early in the year during a political confrontation on the debt ceiling and lower rankings religion of the country in the long run by the agency Standard & Poor’s, is that the conditions started to improve since that time .
Analysts had predicted that it is likely to remain concerned about European banks lend to each other, and that investors continue to demand high interest rates on loans worth billions of euros and Italy need each month to keep the economy active and was standing on his feet.
In the same context, analysts have expressed fears that if the interest rates on debt of Italy to rise, you may lose the country’s ability to bear the costs of borrowing in open markets, and that he would have to instead return to the lenders, officials such as the European Union or the International Monetary Fund.
He said here Mark McCormick, an expert on currency strategist at Brown Brothers Harriman, “This latter rate is a warning. I see from my point of view that the attainment rate of 7% will be the point of no return.” The newspaper said that the European Central Bank provides another criterion for the atmosphere of anxiety experienced by Europe – through the amount of sovereign bonds purchased by the day almost daily.
The bank is trying to provide a market for debt of such countries as Italy and the prevention of high interest rates to levels that are harsh. The newspaper said that the amount of sovereign debt held by the Central Bank more than doubled this year, having reached more than 150 billion euros.
In the view of many analysts that the bank would have to buy the bonds on a larger scale to prevent interest rates from rising, let alone pay for the revenue decline significantly. And asked the European banks, worried about the exposure of each other for bad debts, high interest rate on increasingly to lend euros to each other. Also started to dry up sources of dollars are the other since the month of May / May, with the decline in money market funds in the United States to purchase short-term debt of European banks.
He pointed out in this regard Alex Roeffr, supervisor of the credit markets for short-term bank JP Morgan Chase, that the agreement reached in Brussels on the latest plans to save the euro area has not convinced the money market funds to return again to the European market. Instead of that, it needs a lot of banks that have been diverted to the foreign exchange market open, where the rising cost of swapping euros in dollars, in a sign warning others about the process of financial markets, although the cost is still lower than the levels of the end of 2008.
As Michael pointed Gabn of Barclays Capital in New York he preferred default swaps credit as an indicator of sovereign risk, and reasoned that the trade-offs provide a measure of the cost of insuring against default on the repayment of debt.
In conclusion, the newspaper quoted Mohamed El-Erian, chief executive of Pimco, the giant in the field of investment bonds, saying: “We hope the market and is looking forward to the formation of a Greek stable, able to enhance the support of internal and external. And I expect difficulties faced by the coalition government which is seen as a transition to elections new. “