Almost all analysts have interpreted Mario Draghi’s comments about the “legality” of buying bonds with a duration of less than three years as a preview of what the ECB iwill announce on Sept. 6. JP Morgan’s Executive Director of Global Equity Sales Hugo Anaya believes such statements “are within the new idea of the ECB to intervene in the short term, justifying it by saying that it’s helping the transmission…
By Tania Suárez, Madrid | It seems that September will be a busy month, the beginning of a year full of interesting appointments for investors. As noted from JPMorgan, markets have already priced in aggressive Spanish debt buying by the European Central Bank, “but the risks shall remain high.” Many sources agree that the ECB is not expected to provide many details of the SMP. “There’s not a clear indication…
By Tania Suárez, Madrid | Global growth will remain below trend until later this year, according to JP Morgan expectations. Rates have dropped less than 50bp from their peaks in 2011 and are projected to fall further 20bp until late 2012. Developed markets authorities believe that “the limit of zero interest rates has eliminated the possibility of conventional action.” Meanwhile, emerging markets with still flexible rates, have “persistently high inflation…
How scared are investors of Spain’s debt? Very. So much so that judging by their behaviour, financial analysts in Madrid are increasingly adopting the language of their country’s politicians, if for different reasons. That is war out there for Spain’s sovereign paper, no one doubts. The Spanish debt has now been under extreme tension during a week and the pressure has pushed credit costs up whether it is for two…
WASHINGTON | “Capitalism without failure is like religion without sin, it does not work,” had already said Allan Meltzer in 1969. Pittsburgh's Carnegie-Mellon University teacher and author of the monumental History of the Federal Reserve is the same conservative who advised John F. Kennedy and Ronald Reagan. Under Clinton's presidency he was in charge of a U.S. Congress committee that essentially claimed the end of the World Bank on the basis…
MADRID | CAPITALMADRID.COM In the years 1992/93 the Spanish authorities struggled for longer than events recommended to keep the exchange rate of the peseta. Something similar might be going now on, but in another dimension, as the government still defends the good health of Spain's financial system. Back then, the stabilisation mechanism in place determined a fixed exchange rate for the peseta, let's say in short, against the German mark….
Luis Arroyo, in Madrid | It’s the talk of the town. The euro zone desperately needs to become a fiscal union and, voilà, everything will be sorted. But I wonder: how do we get there? Have a look at the chart below, which reflects fiscal pressure levels in core Europe economies and in some of the peripherals’. What do we see? We clearly spot the huge differences among them (which are…
By Fernando Barciela | News that Portugal’s major cities grounded to a halt Thursday pointed at an initial victory for labour unions, which began today a 24-hour strike against austerity measures agreed by the government in return for an international bailout. Demonstrations and rallies were also planned in 38 cities and towns across the country, including Lisbon. Six months have been enough for prime minister Pedro Passos Coelho to become the most unpopular…
By Carlos Díaz Güell, in Madrid | Portugal has gained the confidence of the Troika (staffers from the IMF, the European Commission and the European Central Bank), as one could infer after reading the note published at the end of their visit last week to Lisbon for the third quarterly review of the adjustment programme. The group acknowledged the progress in correcting imbalances and gave the approval for disbursement of the fourth…
The Latin Bloc may be awakening, after all. The least it could be said about the Spanish government’s decision of bending the public deficit target bar Brussels and Berlin intend to impose, from a harsh 4.4pc to a softer 5.8pc, is that president Mariano Rajoy has enlivened with his move the not-just-austerity talk and the perhaps-Germany-is-wrong debate. In the Friday edition of the Spanish daily El País, former president and…