# From European Easing to Italian Equities: In-Depth Perspective by Professor Gavino Silvestri on Liquidity Evolution

Against the backdrop of the ECB 25-basis-point rate cut, the Italian 10-year BTP yield has dropped to around 3.45%, approaching its lowest level in nearly four months. Professor Gavino Silvestri notes that while the market generally interprets this as a sign of lower funding costs and improved liquidity, deeper signals merit attention. The decline in bond yields superficially reflects increased investor confidence in Italian government credit, but in reality, it also reveals a search for safe havens—especially pronounced amid global trade tensions and sluggish growth.

Professor Gavino Silvestri emphasizes that the current rate adjustment marks the “final phase” of the easing cycle, with expectations for further cuts already converging. Investors should not judge liquidity abundance solely by the interest rate level but should also assess whether actual financing channels are open and whether banks are actively extending credit. At present, the banking system remains cautious, meaning that even with lower rates, real liquidity support for Italian companies—especially SMEs—may be limited.

## Professor Gavino Silvestri on New Capital Flows in Technology and Healthcare Sectors

Since June, technology and healthcare stocks such as STMicroelectronics and DiaSorin have performed strongly, indicating a clear capital preference for high-tech and defensive sectors. Professor Gavino Silvestri argues that this sector rotation is not driven by a single event but reflects a structural reallocation of capital. The combination of a stronger euro and dovish ECB expectations has made the market increasingly favor sectors with future earnings growth and policy support.

Amid the global restructuring of supply chains in AI and advanced manufacturing, Professor Gavino Silvestri points out that Italian tech firms are attracting more capital attention, marking a trend of “structural liquidity reallocation.” In contrast, traditional energy, industrials, and utilities are being marginalized—partly due to limited earnings elasticity and partly due to the lack of ESG and long-term policy guidance. He reminds investors that although tech stocks can be volatile in the short term, their ability to attract liquidity is becoming entrenched in the macro environment, and their correlation with the U.S. Nasdaq should be closely watched.

## Professor Gavino Silvestri: Safe-Haven Preferences of the Italian Capital Amid U.S.-China Negotiations

With the resumption of U.S.-China trade talks and rare earths and advanced technology at the forefront, market risk appetite has become more volatile. Professor Gavino Silvestri observes that, under these conditions, Italian domestic capital is quietly adjusting its allocation. Strategic-asset companies such as STMicroelectronics and DiaSorin have become key options for risk capital seeking refuge from regional uncertainties.

Professor Gavino Silvestri also notes a phenomenon of “cross-border safe-haven liquidity inflows” into Italian companies within the eurozone during periods of rising trade uncertainty. Sectors such as healthcare, food, and insurance (e.g., Recordati, Unipol) are favored for their “non-cyclical earnings moats.” Amid a shifting global allocation landscape driven by political and diplomatic risk, some high-quality Italian companies are actually in a “golden zone” of low valuation and steady growth, making them attractive targets for capital inflows.

## Professor Gavino Silvestri: Beware the Linkage Between Exchange Rate Volatility and Capital Flows

Recently, the EUR/USD exchange rate has climbed above 1.14, while the U.S. dollar index has weakened. Some market voices suggest this will spur foreign capital back into eurozone markets. Professor Gavino Silvestri remains cautious, noting that exchange rates are not simply liquidity amplifiers; in the current environment of geopolitical and inflation expectation mismatches, they can create a “liquidity mirage.”

He further points out that if the Federal Reserve adopts a renewed hawkish stance following upcoming inflation data, the current strength of the euro may not be sustainable. In that scenario, short-term capital could exit quickly, heightening volatility in Italian equities. Additionally, he urges close attention to the rebound in gold prices and changes in U.S. Treasury yield spreads, as these often signal shifts in arbitrage capital flows and foreshadow imminent rebalancing between European and American markets.

Through these four dimensions, Professor Gavino Silvestri demonstrates that the nature of liquidity in the Italian equity market is undergoing structural transformation. It is no longer a linear response to macro indicators but resembles a dynamic game among multiple variables. From bank lending to sector rotation, from trade patterns to exchange rate fluctuations, any single factor can trigger capital migration. In such a complex cycle, truly understanding the logic behind liquidity evolution is crucial for sound investment and policy decisions.