Chris Iggo (AXA IM) | The market is trading like it believes the mid-cycle correction story rather than the impending recession narrative. Equity and credit markets are doing “ok” and rates have bottomed for now.
J. P. Marín-Arrese | Once again, Jerome Powell played down the need for monetary easing in the press conference following the Fed’s rate cut decision. His unconvincing delivery led Mr Trump to heap scorn on his uninspiring performance. For once, his bitter recriminations were fully justified.
Niel Dwane (Allianz GI) | The response of central banks to the financial crisis 10 years ago may have saved the world from a devastating depression, but it also created a host of unforeseen effects – from more indebtedness to more economic inequality. Looking back at what we got right – and what went wrong – what lessons can we take away for the future?
J. P. Marín-Arrese | While betting on such firepower helped to ground the recovery, its ability to deliver a sustained boom seems less obvious.
Fernando Fernández (IEAF) | Perhaps the moment has arrived to abandon the temptation to arbitrate, to recover humility and discuss what should be the aim of monetary policy.
Morgan Stanley | As we indicated in our last real estate strategy report, this has been the worst sector in Europe in 2Q19 (oversold and with a relative performance of 3.5sd below its 12MA). This has been mainly motivated by concerns about the proposal to freeze rental prices in the city of Berlin (and its possible spread to other cities in the country) as well as the uncertainty regarding Brexit.
José Ramón Díez Guijarro (Bankia Estudios) | In recent years there has been a debate in academic circles about the limits of monetary policy, once the barrier of negative interest rates has been crossed. With the additional problem that not even in Japan, where the natural interest rate has spent practically two decades in negative territory, has the central bank dared to dive deep into the zone of below zero interest rates, even though the economy has been stuck in a deflationary stagnation which has given birth to new economic jargon (japanisation) to refer to this type of economic process. The doubt is whether the Bank of Spain got is wrong by not using monetary policy more intensively or got it right be assessing the risks of traveling in this unknown territory as greater than the possible benefits.
Despite weak employment creation data, analysts at DWS point out that the US labour market probably remains too vigorous in general to justify the Fed cutting interest rates.
Macroeconomists at Morgan Stanley have updated their estimates and believe that global growth will remain frozen at this level for the rest of 2019.
Miguel Navascués | Recently, in the US, long term interest rates have fallen below short term rates. This has a more concrete significance: the economy is getting weaker and could enter recession. Something unusual has happened which we must explain.