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European interest rates started on Monday with slight movements, but in the afternoon, interest rates fell overall, stock markets rose and the euro weakened. Italy was in focus.
At the Swedish closure the German ten-year rate rose 2 points to 0.45% (the recovery took place on Friday night) and Sweden closed up 2 points to 0.68%. An earlier decline in the Italian 10-year rate had already been recorded and was at 3.47% at the close in Sweden, after at least 3.30% earlier in the morning.
Italian Deputy Prime Minister Luigi Di Maio said Monday morning that the government is ready to discuss its budget plan with l & # 39; EUcommission and repeated that the country does not intend to leave the euro.
And in a letter to the EU, the country's finance minister, Giovanni Tria, said that he would not let the country's budget deficit widen further than the 2.4% target for 2017, but that he had to break the deficit rules to help the poorest of the country.
European Commissioner for the Economy, Pierre Moscovici said for his part that the EU still had questions about the budget deficit of Italy and that the structural deficit was far too high. He also said that the Commission wanted a constructive dialogue with Italy on the budget and not a crisis.
However, tomorrow the European Commission should make the unusual decision to ask a Member State to change and resubmit a new draft budget.
Italy is targeting a deficit of 2.4% next year, against an agreed deficit of 0.8%. EU sources have pointed out directly to the news agency that the Commission's objections at this stage concern the total amount of the budget deficit and not the content of it.
After the failure of the Italian budget by the Commission, the Commission has three weeks to submit a new budget.
"The conflict comes so continue and the markets will continue to be volatile, "writes Marco Wagner, Commerzbank, in a customer letter. He estimates that the government is acting on the gap between German and Italian rates at 10 years reaching 400 points.
If Italy does not revise its budget, the Commission may initiate the Stability Pact procedure against excessive deficits. This is happening because Italy is not reducing enough its very large public debt.
On Friday night, the rating agency Moody's Italy lowered Baa2's credit rating to Baa3, with a stable outlook.
Moody's worries about the expected major deficit, the vulnerability of the high level of its debt and the effectiveness of reforms aimed at boosting growth.
The judges noted at the same time that it could have been worse.
"That was it as sweet as possible and should be a relief for investors. The uncertainty has been eliminated, which should be rewarded by a real rally, "said Ciaran O. Hagan of Societe Generale according to Bloomberg News.
The credit rating is therefore still above the limit of the investment category. A rating change from Standard & Poor's is also expected soon.
The German Bundesbank wrote in its monthly report that the German economy probably stopped in the third quarter, but as it was due in large part to the problem posed by the car manufacturers to the emissions tests, stopping growth should be temporary.
According to the Bundesbank, basic conditions are in place for the German economy to recover in the fourth quarter.
On the Brexit front, British Prime Minister, Theresa May, will announce Monday afternoon in Parliament the state of play of projects on the brexite and should talk about success such as Gibraltar and the settlement of disputes with l & # 39; EU.
"In total, 95 are percent brexite agreement and its protocols are now clear. And we have broad agreement on the structure and scope of the future relationship, which has led to significant advances in security, transportation and services, "Bloomberg News said.
The UK said it could be flexible on the issue of an absolute deadline for finding a solution to Northern Ireland.
But on Monday, there was information that Mays' support party, Northern Ireland DUP, would support a skepticism about the euro that would make the bailout "Irish" or "ineffective" .
After meeting with President Andreas Norlén, sitting Prime Minister Stefan Löfven announced that he would be pursuing probations next week. No position has changed, according to Löfven, who however said there was a better understanding of each other's positions.
US interest rates remained stable and the 10-year rate was trading at 3.19%, one point lower than at the Swedish closing on Friday.
On the forex market, the euro strengthened against the dollar this morning, but gradually dropped to 1: 1474, against 1: 1485 on Friday. The dollar continued to strengthen against the yen at 112: 72, from 112: 54.
The crown continued Monday, more than 1 öre is stronger at 10.33 against the euro and has remained steady around the 9-line against the dollar.
Monday's agenda was meager, but several interesting points are expected later in the week.
Riksbank, Norges Bank, the Bank of Canada and the ECB provide all interest rates. For Sweden, we also obtain forecasts of demand for loans from National Office of Debt and KI barometer. The euro area offers the PMI and Germany on the IFO index, and the United States the first estimate of GDP for the third quarter.
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