US bonds & Italy keep risk appetite in check
|In mid-morning trading the FTSE 100 is flat, as indices watch the 10Y Treasury and keep an eye on developments in Italy.
- Equity rally stalls as bond yields rise
- Italy to pose a threat to eurozone stability
- Royal Mail powered by overseas division
The ghost of the 10-year Treasury yield has returned to spook markets again, with equities failing to make much progress as attention fixates on the key global benchmark. European indices are becalmed this morning, hit by a lack of big macro drivers in economic data terms, while developments overnight in the Italian situation have prompted some cautious risk-taking in Italian stocks. Despite the denial of plans for a €250 billion debt cancellation, the incoming government still seems on course for a collision with the ECB and Brussels, and as a result threatening to unravel the delicate consensus that has existed since the eurozone crisis calmed.
The drop in Royal Mail shares this morning is only to be expected, after its dizzying ascent to record highs, made all the more remarkable by the fact it took place during a period of heightened volatility for equities. Still, while there will be plenty of concerns about its UK business, the international division still looks to be a real engine of growth. This looks like one to keep an eye on in the long term.
Ahead of the open, we expect the Dow to start at 24,712, down 56 points from last night’s close.
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