The European Central Bank raised interest rates more than expected, is the European debt crisis excessively worried?

　　The European Central Bank (hereinafter referred to as the "ECB") has finally started raising interest rates for the first time in 11 years, and the rate hike has exceeded expectations. Despite this, the European Central Bank's monetary policy pace still lags behind many other central banks around the world and is also considered to lag behind inflation. The actual situation.

At the same time, under a series of problems such as the energy crisis, high inflation, and the weakening of the euro, the outside world's worries about the recurrence of the European debt crisis have not faded.

　　After the unexpected rate hike, the European bond market was under pressure again. On the 21st local time, the yields of government bonds in southern European countries such as Italy rose sharply.

The yield on Italian 10-year government bonds rose to a nearly one-month high of 3.75% overnight. As of press time, it fell to 3.523%. Spain and Greece 10-year government bond yields were at 2.423% and 3.572%, respectively. Germany The 10-year Treasury yield fell to 1.0480%.

　　Yuan Tao, a senior foreign exchange analyst at Dongzheng Futures, said in an interview with a reporter from China Business News that the ECB is currently struggling to balance inflation risk and debt risk.

The confidence of the European Central Bank to dare to raise interest rates beyond expectations lies in the introduction of anti-fragmentation tools, which will help avoid the recurrence of the European debt crisis.

　　Cai Shaoli, a researcher from the FICC team of Huatai Futures, said in an interview with a reporter from China Business News that from the evolution path of the last round of the European debt crisis, "high debtor countries defaulted - some European banks default risk increased - euro area sovereign debt risk increased". At present, the risk of European debt is only the first step of "high debtor countries may default".

Are European risk assets facing some sell-off risk?

　　Yuan Tao believes that the sell-off of government bonds in the peripheral countries of the euro zone and the unexpected increase in interest rates by the European Central Bank is the direct trigger, which increases the debt repayment costs of the above-mentioned countries.

　　On the 21st, the European Central Bank raised interest rates for the first time since 2011, and decided to raise the three key interest rates in the euro zone by 50 basis points.

　　According to the latest data from Eurostat, as of the end of the first quarter of 2022, Greece, Italy, Portugal and Spain had government debts as high as 189.3%, 152.6%, 127.0% and 117.7% of their gross domestic product (GDP) respectively.

According to EU regulations, the government debt of member states should not exceed 60% of GDP.

　　Cai Shaoli believes that from a deeper level, the selling of national debts of peripheral countries in the euro area reflects the market's pessimistic view of the overall economic fundamentals of the euro area.

Against the backdrop of energy shortages, weak core economies and a depreciating euro, the ECB's rate hikes will expose risky assets across Europe to a certain level of selling risk.

　　Energy supply problems still plague Europe, despite the restart of the Nord Stream-1 gas pipeline linking Russia and Germany after ten days of maintenance, Klaus Mueller, head of Germany's network regulator, said on social media , after the overhaul, the gas supply that Russia has notified to deliver has only recovered to about 30%.

　　According to data from Gas Infrastructure Europe, as of the 20th, the average filling rate of natural gas storage facilities in EU countries was 64.97%, which is still far from the goal set by the European Commission to make up 80% of the filling rate by November.

　　As the European economic locomotive, Germany runs a merchandise trade deficit for the first time in more than 30 years.

The International Monetary Fund said recently that due to the impact of energy problems, the agency lowered its economic growth forecast for Germany this year and next to 1.2% and 0.8% respectively.

　　Yuan Tao also said that the increasing political risks in Italy have also brought a certain degree of blow to the country's debt problems and economic fundamentals.

　　A few days ago, Italian Prime Minister Draghi went to the presidential palace to resign for the second time.

The Italian government cabinet held a meeting on the evening of the 21st and decided to hold early parliamentary elections on September 25th.

　　"Generally speaking, the Italian government determines the budget for the next year from September to October every year and submits it to the European Commission for approval. If the parliament is dissolved, it means that the budget for the next year cannot be finalized as scheduled. In addition, Italy is the EU's 'recovery fund' The biggest beneficiary country, if the Italian government changes, the EU will inevitably re-evaluate Italy's ability to implement reform and investment plans, and may delay the release of the second tranche of funds." Sun Yanhong, director of the European Economic Research Office of the Institute of European Studies, Chinese Academy of Social Sciences, recently said in a statement. In an interview with a reporter from China Business News, he said.

Is the European debt crisis likely to recur?

　　According to the two analysts interviewed by the first financial reporter mentioned above, the debt pressure of peripheral countries in the euro zone may increase, but there is still a long way to go before it turns into a crisis.

　　They believe that the risk transmission path of the last round of the European debt crisis is "default of high debtor countries - rising default risk of some European banks - rising risk of sovereign debt in the euro area".

However, judging from various data in the current bond market, such as the yield spread of German and Italian 10-year government bonds, and the Italian 5-year credit default swap (CDS), which measures the risk of sovereign debt and bank default, the current European bond market situation Much more optimistic than a decade ago, with only signs of rising debt pressure on peripheral countries.

　　As of the press time of the first financial reporter, the yield spread of the 10-year German and Italian government bonds has widened to 254 basis points, which is still quite far from the high point of more than 500 basis points in the European debt crisis in 2011.

　　In Yuan Tao's view, compared with ten years ago, the ECB has experience in dealing with debt problems. At present, the ECB has introduced some preventive policy tools, and major countries such as Germany have loosened their fiscal constraints.

In addition, some countries in the euro area have carried out some structural reforms in the past ten years, which have made the economy develop for the better.

The above-mentioned forward-looking monetary and fiscal policies are all conducive to avoiding the fermentation of debt problems.

　　On the 21st, the European Central Bank announced the launch of a new monetary policy tool, the Transmission Protection Tool (TPI).

As the ECB continues to normalize monetary policy, the new tools will ensure the smooth transmission of the monetary policy stance to all euro area countries, the ECB said, "the size of TPI purchases depends on the severity of risks to policy transmission" and that purchases are not subject to change. "pre-restriction".

　　Yuan Tao said that whether the debt problem will ferment, in addition to policy, also depends on the fundamental trend of the European economy. In the future, attention should be paid to the energy issue and whether the pace of the Fed's interest rate hike will be reversed.

"The energy issue is the key to affecting the future direction of the European economy. The future direction of energy prices may be affected by the reduction in supply due to the situation in Ukraine and the decline in demand due to the economic recession. If energy prices fall in the future, it will be conducive to the recovery of the European economy. In addition, if the Fed's rate hike pace is no longer aggressive, it will release more liquidity to global financial markets, push the dollar to weaken and increase global demand, which will also benefit the European economy," he said.

　　Cai Shaoli believes that, whether the risk of sovereign debt in the euro area will spread in the future, we should pay attention to three core indicators: member states’ fiscal deficit ratio, government leverage ratio (ie government debt balance/nominal GDP), and the ratio of current account balance to GDP. Helps identify member countries with higher debt risk.

　　"In the future, we should focus on the macroeconomic policy trends of four countries with relatively high debt risks: Greece, Italy, Spain and France," he said.