by Marzio Quaglino

February 26, 2021It is a small earthquake that is hitting the markets.

Yesterday the US stock exchanges lost a lot of ground, especially the Nasdaq (-3.52%).

Tokyo lost 3.99% today.

The markets, which are betting on a strong recovery of the US economy, however, also fear a rise in prices.

If inflation gets out of hand, then the Federal Reserve could drive up the cost of money after years at virtually zero rates. 

Hence the strong reaction of the markets to the signs of this scenario consisting mainly of the surge in yields on US government bonds.

Even in Europe, therefore, a negative start, but not as pronounced as in the rest of the world.

Milan is down by 0.79%, in line with Paris, while London and Frankfurt contain losses below half a percentage point.

Tensions on government bonds also push up the yield on our ten-year BTP which returns to above 0.80%, while the spread with German Bunds widens slightly to 107 basis points.