The ECB purchased €20.3bn of QE assets over Jan. Only 61% of the purchases were done in public sector bonds, much lower than the 80% average over 2016-18. This confirms the view of BoA Global Research that QE will now be more focused on corporates & covereds. The country breakdown of monthly PSPP is much more volatile now. In CSPP there are interesting secondary and sectorial flows.
Telecom networks have high energy consumption. Companies in the sector are now taking steps to improve their energy efficiency through the use of renewable energy, network sharing, etc. According to Morgan Stanley, the use of green bonds to finance projects (5G, fibre optic) will increase. About €3.5 billion of the current debt could be refinanced annually via this kind of bond.
The world has changed a lot because China has changed a lot. China’s share of global GDP has risen from a negligible 2% in 1990 to 15.9%. Meanwhile, the other powers have fallen in that period: Japan, from 14 to 5.8%; Europe, from 35% to 21.9%; and the USA, from 27% to 23.9%, according to Weltbank data. So hundreds of thousands of jobs in Germany are now dependent on China. And all over the world, because China today accounts for 1/3 of world growth.
In this article, published by the magazine from IEAF , economists Carlos Contreras y Álvaro Contreras question whether the Public Sector Purchase Programme (PSPP) carried out by the European Central Bank (ECB) generates short-run market anomalies in European sovereign-linked credit and bond markets.
Julius Baer | Although the UK will most likely officially exit the EU tomorrow, this exit will mostly be formal. The withdrawal agreement only defines the terms of divorce, limiting immediate disruptions, but says little about the future trade relationship between the UK and EU. The so-called ‘Political Declaration’, a 26- page sketch of the future trade relationship alongside the with- drawal agreement, but not legally binding, defines a so-called ‘transition’ or ‘implementation’ period from the date of Brexit until the end of 2020.
The new European Banking Authority (EBA) proposal will be analysed and discussed by the parties involved up until April 30, with a public discussion session on February 21. It will give banks more room for manoeuvre in the calculation of their projections. That said, the agency has insisted standards will have to remain high. The banks will have to continue detailing capital requirements, major risk factors or exposure data.
CaixaBank Research | The weakness of the industrial sector, which we have recently analysed, is one of the major factors behind the slowdown in the global economy and, in particular, that of the euro area. However, the resilience exhibited by the services sector, which accounts for the bulk of economic activity,continues to drive growth and gives continuity to the expansion. But just how resilient has the services sector really proven to be? Is there a risk of contagion from industrial weakness?
Euro area governments could increase tax revenue by 3% of GDP on average by improving their value-added-tax systems, creating fiscal space for heavily indebted countries such as Greece, Italy and Spain, and boosting growth by reducing tax distortions.
Manuel Moreno Capa | As soon as Boris Johnson swept to victory in the UK general election of last December 12, he made two decisions that have not been welcomed by the City of London: the first, to reduce the transitional period of Brexit to one year (how naive he is if he thinks his tough stance will soften the positions already taken by Brussels); the second, to appoint a new Governor of the Bank of England not much liked by the markets.
Antoinette Ismail (European Views) | Net demand for loans to businesses in the Eurozone area reached their lowest level in six years at the end of 2019, that’s according to the latest Euro Area Bank Lending Survey (BLS) from the European Central Bank (ECB). It is the first time a decrease in demand for enterprise loans has been recorded since the fourth quarter of 2013.