Without government the spread rises, how much the instability of a crisis weighs

The government crisis is about to undergo its decisive passage, with the communications of Prime Minister Mario Draghi to the Senate and the House on Wednesday and the consequent vote of confidence, and the spotlight on the reaction of the markets remains on. Two parameters to monitor, the performance of Piazza Affari in relation to the other European stock exchanges, and the trend of the spread, the differential between the ten-year BTP and the German Bund equivalent. The factor that most influences them, in passages like the one we are experiencing in these hours, is political instability. It is uncertainty that historically determines the phases of greatest financial fibrillation, opening passages into which speculation enters. An analysis by Gabriel Debach, market analyst at eToro, puts together the data that describe the relationship between the duration of governments and the trend of the spread. The closure of Draghi’s experience of governance, Debach points out, “could risk increasing the speed of spread widening, with the stability of the government which, as per historical evolution, represents the real challenge necessary to calm the bullish pressures on the differential” . The comparison between the duration of individual governments and the behavior of the spread is interesting. Obviously, the external context, the economic situation, the approach and consequences of monetary policy and the legacy left by the previous executive also count. But the trend, for six out of seven governments from 2011 to today, shows that, net of external factors, a decline in the spread is linked to government stability. The Draghi government has lasted 520 days so far and the spread has gone from 94.5 points to the current 204. However, today’s figure is strongly influenced by the outbreak of the war in Ukraine and by the ‘missteps’ in the communication of the ECB which reversed the a sign of monetary policy to combat inflation. The Conte 2 government, which lasted 527 days, started from an initial spread of 151.7 points and closed at 94.5 points. Conte 1, which lasted 461 days, went from 237.7 to 151.7 points. The Gentiloni government, in office for 536 days, technically went from 151.3 to 237.7 points. But it must be considered that it is more correct to consider as the final figure the value on March 2 – the last day of trading before the vote on March 4, when the political situation of the country changed radically – and the spread was 140 points. lasted more, 1024 days, and went from a spread of 193.8 to 151.3 points. The government Letta, 300 days, from 267.9 to 193.8. The Monti government, 529 days, saw the spread lower from 498.5 to 267.9 points.