One week after Italy’s disruptive reminder that capital markets are still quite sensitive to the wrong sort of news, equity and bond markets returned to much quieter waters. Italian bond yields remain more elevated compared to other Eurozone countries than they have for a long time and this might not change for a while.
All the more important for the Eurozone and the EU as a whole then that German chancellor Angela Merkel finally put her EU reform proposals forward in the form of a newspaper interview. Strangely, they received little international attention, even though they had been eagerly awaited ever since France’s Emmanuel Macron shared his grand vision 8 months ago.
While she somewhat bluntly rejected a debt union – which would be the natural and most stability instilling next step for the lose currency union – she did make quite detailed alternative proposals, which may be more achievable than a grand vision anyway.
