The value of bad news

Bad economic news staves off further rate hikes

WHAT HAPPENS
It is not certain that the signs of a recession are immediately translated into lower stock prices. This is certainly the case in the Eurozone and in Germany, where the main stock markets still show no signs of abating despite the fact that the German economy is now technically in a recession, and the others are about to enter it.
It is the “bad news-good news” paradox whereby the deterioration of economic fundamentals convinces market operators that policy makers will loosen the purse strings. In this case, the ECB will stop raising rates.
The same goes for the increase in unemployment, the rumblings of banking crises and the increase in public and private debts.

WHAT TO EXPECT
The yield of the 2-year BTP came close to 4%. It hadn't happened since July 2012. On the other hand, the 10-year BTP closed at 3.27%.
Two questions arise spontaneously: a) why should an investor buy the 10-year bond, which yields less and exposes to greater interest rate fluctuation risks? b) why should the same investor buy shares since he can earn the 8% in two years without risk with a BTP?
The answer is simple: someone is miscalculating. There is a bubble in the markets, or perhaps more than one that will have to be reabsorbed. The ECB is hoping equities correct more sharply than bonds, but the market is still playing the opposite bet. Someone is wrong and we will soon find out.