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global liquidity drivers

In Europe 2nd September 2016

Credit And Liquidity In The Eurozone

J. L. M.Campuzano (Spanish Banking Association) | During one of the conferences at last week’s Jackson Hole meeting, ECB council member Benoit Coeure analysed the extreme monetary measures taken by the ECB (in reality by all the main central banks) during the crisis. His opinion was that the neutral interest rate equilibrium is now very low (the product of a combination of low potential growth and low inflation expectations) which explains the remainder of the exceptional measures implemented.

hucha

World economy 24th August 2016

The Impotence of the Central Banks

Governments do not want to acknowledge that a Central Bank does not have the ability to bolster the economy. Monetarism has not worked. The massive purchase of corporate bonds by the Central Banks has not worked. They have been left alone to face the problem and they have failed. The solution is to activate demand and Central Banks cannot do this.

thinker

World economy 10th August 2016

Central banks should reflect on monetary policy

J. L. Martínez Campuzano (Spanish Banking Association) | The BoJ has begun a period of reflection to try to answer the question of why expansionary monetary measures are not being reflected in higher inflation. I honestly believe that this is a reflection which other central banks should undertake. But, in the end, the easiest thing will always be to continue with more measures without a clear strategy of what their final objectives are.

ECB on inflation

In Europe 1st August 2016

TARGET 2: Capital Flight From Italy And Spain Continues

Miguel Navascués | Take a look at the outstanding balances in the ECB’s TARGET2 payments system, which maintains an up-to-date record of the debts and loans each country has with the other. As can be seen from the table below and the subsequent graphics, Italy, where the banks have 360 billion euros of doubtful loans, as well as Spain, have again begun to show signs of weakness.

ECB resource

Spanish economy 28th July 2016

European Government Bonds: A Sense Of Pragmatism

Julius Baer Research | We share the view of Mario Draghi, President of the European Central Bank, that his ultra-accommodative monetary policy stance alone cannot push the eurozone economy out of its current weakness but needs to be complemented with fiscal impulses.

european parliament

In Europe 26th July 2016

Hot Potatoes? Encouraging News From Euro Land

James Alexander | It’s been lonely blogging that the Euro Area economy was not nearly as bad as consensus reckons, even consensus amongst our fellow Market Monetarists. But the data has consistently shown Euro Area NGDP growth doing better, and at least as good as the long-term average.

 

ECB's tapering

In Europe 21st July 2016

ECB, Nothing New: Rates at 0%

The European Central Bank kept its interest rates and policy plans unchanged on Thursday and said the immediate stress caused to markets by Britain’s shock vote to leave the European Union had been contained.

ECB big 1

In Europe 20th July 2016

ECB Poised To Keep Rates On Hold

As the Brexit initial turmoil little by little abates, the ECB has no immediate reason for acting. Its room for manoeuvre already seems extremely tight. Running negative rates allows a most limited scope for driving down the money price. The Euro slide provides on its own enough impetus to the economy. The case for further loosening lacks of enough ground. The wait-and-see stance by the Federal Reserve suffices to shore up the ailing pound.

Business Madrid TC

World economy 19th July 2016

Don’t Worry, Corporate Leverage Only Just Back To Level Of 2007

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.

Eurozones inflation ceilingTC

In Europe 18th July 2016

From The Bottom Of The Core

BofAML | We have been among the most bearish on Euro Area inflation, expecting 0.9% post-Brexit inflation in 2017, versus consensus at 1.3%. This also applies to core inflation, where we expect a very mild trend over the next two years that would leave core inflation slightly above 1% by 2018. Still, markets are pricing declining inflation over the next few years.