Understand the markets, in plain English

What is the spread, explained simply

The spread is the yield difference between Italian government bonds (BTPs) and German ones (Bunds) over 10 years. In practice it measures how much extra trust investors demand to lend money to Italy compared to Germany: the higher the spread, the riskier Italian debt is considered, and the more it costs the state to finance itself.

What is inflation, in simple terms

Inflation is the general, sustained rise in prices over time. When there's inflation, the same amount of money buys fewer things than before: the purchasing power of currency decreases. It's measured by comparing a "basket" of typical goods and services from one year to the next.

What happens if the ECB raises interest rates?

When the European Central Bank raises interest rates, borrowing money becomes more expensive for banks, households and businesses. The goal is to cool the economy and curb inflation: people spend and invest less, demand falls and prices stop climbing. In exchange, though, growth slows too.

What is an ETF, explained simply

An ETF is a "basket" of many securities (stocks or bonds) that you buy with a single purchase, as if it were one single stock. Instead of choosing one company at a time, with an ETF you invest in dozens or hundreds of companies together: it's the simplest and cheapest way to diversify.

What is a stock, explained simply

A stock is a small ownership stake in a company. When you buy a company's stock, you become a partner for that tiny slice: if the company grows and is worth more, your stock is worth more; if it does poorly, it's worth less.

What is a bond, explained simply

A bond is a loan you make to a state or a company. In exchange for your money, the issuer commits to paying you periodic interest (the "coupon") and to returning the full amount on a set date (maturity).

What is the stock market and how does it work

The stock market is the marketplace where stocks, bonds and other financial instruments are bought and sold. It's the place (digital today) where someone who wants to sell a stake in a company meets someone who wants to buy it, and the price is born from that meeting.

What is a stock market index (S&P 500, FTSE MIB)

A stock market index is a number that summarizes the performance of a group of companies, like a market thermometer. Instead of watching stock by stock, the index tells you whether "the market" as a whole is rising or falling.