EUROPEAN MIDDAY BRIEFING – Stocks Fall Ahead of -2-

The Spanish bond outperformance versus Italy and France is justified, among others, by the yet-to-be-concluded presidential elections and parliamentary elections in early 2023 in Italy, and with presidential elections in France in the spring. In addition, Italian bonds tend to suffer more than Spanish ones when Bund yields rise and credit spreads widen, Societe Generale said.

Investors may be forced to price in a higher peak for U.S. interest rates than 2%, UniCredit said. The Fed’s statements and dot plot, a chart that summarizes the central bank’s outlook for the federal funds rate due in mid-March, should shine a light on the issue, analysts at the bank said.