The recovery in long-term public debt in the last two weeks has not gone unnoticed in the markets. Investors sense there is a series of factors which could drive a change in trend in the fixed income market and are gradually taking positions. The German bund has returned to positive territory and Spain’s risk premium has risen by 20 basis points since the beginning of the month.
The provisional data for the Q2’16 balance of payments in Spain shows a surplus of 26 billion euros, which is a maximum level for the series. Namely Afi flags that the balance of services stood at 13.4 billion euros in Q2, up from 12.2 billion a year earlier. It is worth noting this rise amount is not just the result of the good performance from tourism-related activities, but also others such as corporate services.
via Macropolis | As September came to a close, millions of Greek taxpayers scrambled to meet the deadline to pay the second instalment of personal income tax and the first payment obligation of the single property tax (ENFIA).
BoAML | What if the ECB were to start tapering too soon? Based on the ECB’s estimates for the impact of QE this would keep growth below potential and inflation below 1% much further down the line. The probability of deflation would actually be higher than of inflation reaching 2%. But this is not even a stable equilibrium. With higher rates and lower growth, concerns on the sustainability of public and private debt would likely resurface.
It’s been over 280 days since the general elections on December 20th and Spain is still without a government. This has its consequences. On October 15th the country’s caretaker government is due to present its 2017 Budget to Brussels and provide information on the adjustments and other measures which it plans to implement to correct the public deficit. But BS Markets says this draft can only be, at most, an extension of the 2016 Budget, a document without any changes.
The inflation rate for the Euro Area (flash estimate) was at +0.4% in September. It is the highest since October 2014. In August the inflation rate was at 0.2%. The core inflation rate was stable at 0.8%. The explanation has to be found in the oil price profile as said by Philippe Waechter, Chief Economist at Natixis AM.
The future of Europe has more to do with investment than with the ECB. In this context, the so-called Juncker Plan is especially interesting for driving investment, against a backdrop of continued uncertainty for companies. This is a note from Intermoney’s analysts.
Manos Giakoumis via Macropolis | The Engineers and Public Contractors Pension Fund (TSMEDE) found itself in the spotlight over the last few days as a result of being the major shareholder in Attica Bank, which faced a number of issues related to corporate governance and lending activities, according to an investigation carried out by the Bank of Greece (BoG).
The British economy has absorbed Brexit well and one of the reasons for this soft landing is the pound’s devaluation. But the pound’s weakness is already a problem for the Eurozone, particularly for Spain, and if this is prolonged it will be an even bigger one. Furthermore if Europe is stagnating, how Spain can be doing as well as the government says? Are we living on an island?
Jens Bastian via Macropolis | When the largest Greek banks (in terms of assets) published their second quarter results a fortnight ago, much investor attention was focused on the formation and breakdown of non-performing exposure (NPE) on their respective balance sheets. This focus is the result of regulatory authorities and investors wanting to know if the four systemic banks have started to reverse the multi-year trend of continuously rising “red loans” in their portfolios.