COMMENTS ON ASIA-PACIFIC By Ray Kwong | Depending on who you talk to, China became the world’s biggest trader in goods for the first time last year, edging out the U.S. estimated 2013 total by about US$250 billion.
MADRID| By Francisco López| Spain’s banking sector wholesale maturities will reach € 88,000 million in 2014 and € 72,000 million in 2015. Experts forecast that more than half will be financed via foreign markets.Only BBVA estimates to sell around € 7,000 million in bonds and covered bonds.
LONDON | By Michael Gavin at Barclays | The recent decline of headline and core inflation in the US and Europe has intensified interest in the economics of deflation, particularly the perceived danger that Europe may be headed for a deflationary episode. Deflation is particularly unsettling for many policymakers and market participants because of the theoretical risk that it may render monetary policy ineffective, creating a ‘liquidity trap’ from which it may be very difficult to escape.
BRUSSELS | By Jacobo de Regoyos | Athens will preside over the European Union for next semester as their citizens take the streets against budgetary cuts and 30% of their population is unemployed. For some, this magnificently ilustrates what an united and supportive Europe means. For others, allowing Greece, under creditors’ surveillance, to be an international reference during half a year is some sort of a risk. In order to avoid gloomy predictions, Foreign Affairs’ Minister, Evángelos Venizelos, has promised hard work and austerity: “A spartan presidency with Athenian values”.
MADRID | By Francisco López | In the midst of the markets’ euphoria thanks to the sharp fall in the risk premiums of peripheral countries, the big commander came and ordered to stop. The president of the ECB, Mario Draghi, appealed to investors to be cautious facing the risks of a “fragile and weak” recovery in the Eurozone and about an inflation whose expectations on the medium-term have worsened.
LONDON | By Barclays analysts | The ECB left monetary policy unchanged as expected and strengthened the downside bias of its forward guidance somewhat. Mario Draghi insisted on the fragility of the economic recovery and repeated that the ECB would be ready to act should downside risks materialize. We still think that monetary policy should be kept unchanged at least for the next two years, but we acknowledge the risk of further easing should inflation and inflation projections fall further. Besides, liquidity measures could be introduced to support the financing of the economy.
MADRID | By Álex García.
MADRID | By Francisco López | The risk premium has moved from being a huge torment for Spanish decision-makers, to making headlines showing a recovery of the international confidence in Spain’s economy. The interest rate of the Spanish 10-year bond is at its lowest since 2009, the differential with Germany is around 190 basis points and Ibex 35 widely exceeds 10,000 points.
LONDON | By Barclays analysts | France’s macroeconomic situation does not look that bad and on average the country compares well with other developed economies. It does not suffer from a major imbalance in terms of yearly flows (trade, finances, etc). However, weaknesses, perniciously accumulating over the years, have now been laid bare by the crisis.
THE CORNER TEAM | Although fiscal austerity and structural reforms implemented have inflected some euro zone countries a severe pain, they will bring them external capital inflows, Chinese rating agency Dagong Credit predicts for 2014. This combined with the potential increase in Germany’s import demand will mean that the euro zone economies will rebound a little and see pressure of sovereign debt crisis ease further.