Paris (AFP)

The appointment of Christine Lagarde at the head of the ECB and the decision of Brussels not to sue Italy for excessive deficit have plunged European borrowing rates to new lows on Wednesday.

"The market is still going in the same direction and continues to sink" after the appointments of European leaders who were unexpected but were "good surprises", noted with AFP Geoffroy Lenoir, responsible for sovereign rates in euros for Aviva Investors.

"Investors have reacted positively to the prospect of the arrival of Ms. Lagarde at the head of the European Central Bank, he continued, because they expect with it a continuity in monetary matters."

"At the head of the IMF, it has indeed always been accommodating and favorable to fiscal stimulus policies," added the expert.

Investors expect that it will follow in the footsteps of its predecessor Mario Draghi, who said on 18 June that the Frankfurt institution could start lowering interest rates after more than three years of stagnation. or even revive its asset buyback program if the economic outlook for the euro area does not improve.

The US Federal Reserve (Fed) followed suit two days later, opening the door to a possible decline in interest rates and this prospect of monetary easing on both sides of the Atlantic precipitated the easing of interest rates. European sovereigns.

- "Return of confidence on Italy" -

The market also benefited greatly from the European Commission's decision not to initiate excessive deficit disciplinary proceedings in 2019 against Italy.

"There is a very strong trend of confidence returning to Italy with a narrowing of the spread between the country's 10-year yield and that of Germany," said Lenoir.

"The decision of Brussels and low rates give room for maneuver in the country.The climate is very positive," for the expert.

"Besides," he added, "the more the Bund goes down, the more interesting the Italian returns are for investors.

In this context, the ten-year borrowing rates of several European countries have thus set new historical records, starting with the German "Bund", which is a reference on the European debt market, which has come down to -0.402%.

At 18:00 (16:00 GMT), the Bund fell to 0.389% against -0.367% Tuesday at the close of the secondary market, where the debt already issued is exchanged.

That of France closed down to its all-time low of -0.106% against -0.056%.

Spain also recorded 0.199%, which finished at 0.207% against 0.293%.

Italy's 10-year borrowing rate ended at 1.580%, down from 1.839%, the lowest level since October 2016. The gap with Germany was 196.9 points. (0.1 percentage point), the lowest spread since May 2018.

The 10-year yield in the UK also fell sharply to 0.688% from 0.722%.

In the United States, the 10-year yield fell to 1.948% from 1.974% on Tuesday, like the 30 year old, to 2.469% against 2.501%. The two-year-old was stable at 1.761%.

? 2019 AFP