Alicia García Herrero (Natixis) | Financial markets were caught off guard when the Bank of Japan (BoJ) adjusted its monetary policy on December 20th, 2022. The Bank decided to lift the ceiling on the 10-year JGB yield to 0.5% from 0.25% under the yield control (YCC). One interesting point to make is that the BoJ did not take the decision against the wall. In fact, the upward pressure on the…
Alphavalue /Divacons | The current political instability in Brazil could harm Spanish companies with an interest in the country. The police have regained control of Congress, the presidential palace, and the Supreme Court after the violent invasion carried out by supporters of Jair Bolsonaro. However, and despite the fact that Bolsonaro has distanced himself from the actions of the protestors, the political tension continues. Among the Spanish companies most exposed…
J.P. Marín-Arrese | Last Friday, Wall Street jumped on employment and services data. Jobs openings, while better than expected, signalled a downward path. The service sector contracted for the first time till 2020. The ensuing bullish reaction shows the markets bet the Fed might undertake a U-turn earlier than pointed out in the last FOMC minutes. Investors seem to outwit the Fed, disregarding its determination to keep rates tight enough…
Bankinter| From the minutes of the Fed’s meeting of December 13th and 14th: There was no explicit mention of the possibility of an interest rate cut in 2023; rather they argue that they believe it is appropriate to keep interest rates at elevated levels for an extended period of time, although they retain the flexibility to react as appropriate to the data at any given time. The Committee expresses concern…
The IMF’s Managing Director, Kristalina Georgieva, warned on Sunday that the world faces a “tougher” year in 2023 than in 2022, saying that a third of the world economy will be affected by recession this year. “The US, China, and the eurozone are all slowing simultaneously. Half of the European Union will be in recession and over the next few months, China’s growth will be negative and its impact on…
J.P. Marín-Arrese | 2022 has witnessed an unmitigated rout in shares and bonds. The coming months might turn into additional bleeding as persistent inflationary pressures and robust employment data entice the central banks to tighten their monetary knot further. Other concerns also sap the investors’ risk appetite. China faces harsh times should it prove unable to cope with its endless pandemic stroke. Downbeat sales and profit prospects will soon surface…
Alicia García Herrero (Natixis) | On 13th December 2022, the EU passed a deal to set up a Carbon Border Adjustment Mechanism (CBAM) to arrest the carbon leakage problem and further support the energy transition. Carbon leakage in this context equates to the scenario that EU countries import carbon-intensive products from countries where carbon emissions are not taxed. More specifically, under CBAM, EU firms will need to pay the difference…
Juan Pedro Marín-Arrese | The Fed is running out of munition after raising its rates substantially. The narrowing margin forces it to slow down monetary tightening. Keeping unabated its previous speed would wreak havoc on the economy. Yet, Jay Powell countered any hope of further softening by delivering a relentless hawkish message at the latest press meeting that plunged stocks into utter disarray. Powell made it crystal clear at Jackon…
Bankinter | Iberdrola has reached an agreement with the Abel Enery group to build a hydrogen and green methanol production plant in Bell Bay, in northern Tasmania (Australia). The investment required will be 1.1 billion euros. The project, called Bell Bay Powerfuels, is backed by the Australian government and will be one of the biggest plants in the world. The production capacity of the new plant will be 200.000 tonnes…
Crédito y Caución (Atradius) | The global economy is facing an unprecedented mix of challenges which are bringing it to the brink of recession in 2023. Stubborn inflation is the most dire challenge, which has far-reaching knock-on effects across the entire economy. We now find ourselves in a much-feared ‘stagflation’ reality – one characterised by low GDP but high price growth. Central banks have undertaken an aggressive tightening path to…