LONDON | Barclays Capital asked 80 of their fixed income clients about what the European Central Bank should do to calm markets down and deflate the ever more acute euro crisis. Investors from outside the euro zone said the central bank’s best chance would be to return to the markets to buy sovereign debt from Italy and Spain, cut interest rates and inject long-term liquidity into the banking system, but…
Just because most European languages attach a semantic Spartan-like element to the term austerity, it doesn’t follow that austerity must obviously be a more consistent policy than, let’s say, a profligacy programme. Common ancient history aside, the increasing doubts about the German and French economies doing well in spite of the stress the euro zone is going under, tells us that austerity plans currently in place in euro peripheral States were not thoroughly…
It was Germany, with a 0.5 percent growth of GDP in the first quarter of this year, that helped the euro zone avoid enter technical recession territory. GDP remained stable in both the euro are and the EU during January to March of 2012 compared with the previous quarter, according to flash estimates published by Eurostat, the statistical office of the European Union. Compared with the same quarter of the previous…
After the news came in of French president François Hollande’s brief encounter with the ever irresistible forces of nature, I began to consider in all seriousness what my mother said about the just sworn-in European leader: “poor thing,” she had muttered during our daily London-Valencia FaceTime conference, which is motherly talk for the more common ‘that guy’s a loser’ remark. Indeed, he was struck by lightning twice in just hours. Here’s the…
MADRID | The injection of public money and nationalisation of Bankia ends a compelling need with a solution, earlier discarded, that in the US or the UK has been long ago adopted but neither the Germans or the French want to face, in spite of many of their banks being as weak as some the Spanish entities may be. François Hollande’s arrival to the presidency of France is also good news:…
LONDON | Those regions in Spain and Italy awarded better risk qualifications than their countries as a whole have overcome the latest turmoil in the euro zone without difficulties. Fitch Ratings issued Wednesday a positive comment on the Italian and Spanish subnationals rated above the sovereign. The agency said that their debt and debt service coverage ratios with the operating balance have largely remained in line with those of similarly…
LONDON | In its global macro outlook report, investment company Schroders said on Friday that its eyes were on France amidst ongoing euro zone concerns and despite the uncertainty surrounding Spain. The upcoming elections could thwart France’s plans to implement State budget cuts, the Schroders paper highlighted, while the European Central Bank refinancing lines would have ring-fenced the Spanish banking sector from liquidity scarcity, unlike Italy’s. “France is the euro zone member currently…
NEW YORK | As the European Central Bank signaled it may resume asset purchases if needed to stem the crisis, the yield on Spanish 10-year bonds slid to 5.82%. Notwithstanding the last few days Spanish bonds went under the unwanted spotlight: yields on the 10 years bonds rose to nearly 6% on Tuesday, the highest since January. In less than two months, Spain’s interest rate has risen about one point….
MADRID | According to Alberto Vigil, analyst at Barclays in Madrid, the peripheral euro risk and particularly Spain’s has been exaggerated by the markets, which would be discounting an economic situation perceived as poor and with a very limited range of choices. Yet, Vigil maintained an optimistic opinion and said investors will reconsider their position when reviewing the strengths of the country. “Spain could have done its reforms much better, but…
MADRID | People at command in Madrid seem baffled by the massive onslaught inflicted on the economy. A steeply rising risk premium coupled with the severe battering the stock market is receiving have dampened any hope to steer out of trouble with minor collateral damage. The dream of a soft landing has switched into the nightmare of plausible intervention. Fear to fall in that abyss has materialised in a rather hectic…