Fidelity | In line with expectations, the Bank of England’s monetary policy committe voted unanimously to cut interest rates – for the first time since 2009 – by 0.25%. It also announced a package of additional measures, such as an extension of the current quantative easing programme (including corporate bond purchases) and a new liquidity line (Term Funding Scheme).
The outstanding labour market performance in the US has triggered widespread speculation of a Fed rate hike as early as September. Nonetheless, most new jobs are part-time, while the hourly wage increase lags well behind its pre-crisis pace.
J. L. Martínez Campuzano (Spanish Banking Association) | Perhaps one of the most important conclusions of the G20 meeting held in China was the need for monetary and fiscal instruments to fuel demand. But also for reforms to adjust supply and increase growth potential. There is no doubt that every instrument of economic policy is needed in the fight against weak growth and low inflation.
CaixaBank | Everything is ready for the inauguration of the 2016 Olympic Games in Rio de Janeiro on Friday. This is the most important global sporting event and Brazil is the first South American country ever to have hosted the games. But what will the economic impact be for the country which is in recession?
In an internal report, the IMF has confessed to errors linked to the bailouts in which it participated during the euro crisis, according to what Ambrose Evans-Prichard tells us. Just what the euro needed: explicit recognition, in black and white, that nothing could be done about the “infamy of competitive devaluation.”
Huang Zhilong via Caixin | Chinese policymakers have turned to domestic consumption as a new force to drive economic growth, as debt-heavy businesses and local governments face growing pressure to deleverage. But as the nation’s economic expansion and wage growth cool, it will be difficult to encourage ordinary people to increase spending if that means borrowing more.
Wall Street’s ability to suprise the world with its strength seems boundless. While the stock markets in the emerging countries are sinking and the European bourses are almost stagnating, Wall Street’s indices have been breaking records since 2010, immune to bad news.
The IEA estimates that the drop in production in non-OPEC countries, mainly the US, coupled with the positive trend in demand, could foreseeably shut off the excess of supply in the second hald of 2016, returning stability to the oil market.
Julius Baer Research| Thanks to significant fiscal support measures, China was able to keep its annual growth rate stable at 6.7% and even accelerate its quarterly expansion rate from 1.2% to 1.8% in Q2 2016. China has several options to manage the expected slowdown ahead: fiscal spending, interest-rate cuts and renminbi devaluation will be able to limit the cyclical risks ahead.
AXA IM | Companies have re-leveraged their balance sheets since the global financial crisis (GFC), driven by low borrowing costs. Although heightened, corporate leverage is not currently excessive in developed markets, although we see signs of concern in emerging markets. In this note we assess whether we should be concerned about corporate leverage at current levels.