LONDON | Barclays analysts | Central banks will remain in the spotlight this week, with banks in Europe, UK, Australia, Malaysia, Thailand, Poland and the Czech Republic all set to deliver policy decisions. Of these only the NBP in Poland is likely to move, cutting policy rates by 25bp, in our view. However, most attention will be on the ECB for any hints of future QE, as economic data remain a challenge.
PARIS | Guest post by Francesco Saraceno | Germany has been sitting on the shoulders of the rest of the world economy, and since 2010 it has been followed by the rest of the eurozone that is globally running trade surpluses. I have already said many times that this is a bad (and dangerous) strategy.
MADRID | The Corner | Regarding the corporate bond purchases by the European Central Bank, market watchers at Barclays consider that it won’t be enough to expand the balance sheet by €1trillion. Expert Alberto Vigil notes that, since investors are already buying corporate bonds, it doesn’t make much sense for the ECB to also purchase them, especially given the fact that asset risks are not exactly cheap. (Graph by Bruegel)
MADRID | The Corner | The dollar is set to rise, mostly as monetary policies of the Fed, ECB and BoJ are set to diverge dramatically, the greenback trend being intact and the cheap valuations, analysts at Barclays commented.
MADRID | By Ana Fuentes | Trying to compete with emerging markets is not enough: Those EU countries trying to re-launch their industrial sectors in order to boost economic recovery need to go through technological changes, Yao Yang explains to The Corner. Dean of the China National School of Development and Director of the China Center for Economic Research, he believes that austerity in Europe has not been in vain. On the same day, business-research group Conference Board reported that Chinese growth will dip to 5.5% in 2015-19, Prof. Yang points out that such a decline would not mean any catastrophe.
SAO PAULO | By Marcus Nunes via Historinhas | Tim Worstall comes out and calls a “spade a spade” in “Europe Doesn’t Have A Debt Crisis, Europe Has A Monetary Crisis”: The stock markets plunge over concerns about the eurozone; there’s a flight from lower quality sovereign bonds; Greek, Spanish and other periphery bond yields spike. It looks like the eurozone debt crisis is back. But this time around we really should get to grips with the fact that what we’ve got here is really not a debt crisis.
MADRID | By JP Marín Arrese | Stock markets all over the world are plummeting while bond yields have regressed to fresh lows, as investors grow increasingly worried about growth prospects. Signs the US economy might be slowing down, coupled with the Eurozone plight, paints a gloomy scenario. Yet, the utter lack of direction in policies across the Atlantic stands as the most worrying concern.
HONG KONG | From Barclays analysts | China inflation fell further in September, to 1.6%, below consensus (1.7%), but in line with our forecast. The key downside drivers were lower commodity prices, and declining food inflation. Inflation has now fallen to its lowest levels since January 2010, a 56-month low.
SAO PAULO | By Marcus Nunes via Historinhas | For the last 16 months the Fed has been on “tightening mode”. This is very clearly reflected in the chart for inflation expectations above. When Bernanke started the “taper talk” in May 13 inflation expectations came down and stayed down. Following the June 14 FOMC meeting, dedicated to discussions of “policy normalization” inflation expectations dived! How can they be surprised with the consequences.
MADRID | By JP Marín Arrese | The Lehman Brothers example showed all too vividly how a credit institution might collapse should it find its coffers empty. Lack of confidence or sheer insolvency trigger financial crises. Yet the implosion always happens when depositors are unable to cash out their money. No wonder Basel III emphasized the need for banks to set up robust liquidity buffers.