Column by Hendrik Tuch, Head of Fixed Income “Interest rates and yield curves have seen quite some volatility in the last few weeks as markets digested the election news and the coronavirus headlines. Ahead of the US elections, many investors
Of course, the impact of next week’s elections in the US goes well beyond the economic and financial realm, but from our narrow angle, we will follow the results across two dimensions. One is volatility: whether a winner emerges quickly
Research & Strategy Insights The sense of disappointment on the state of the recovery is particularly acute in Europe, where the traditional macro indicators, such as the PMIs or the forward-looking components of the national surveys, are already pointing to
The Fed announced an inflection of its long-term objectives by making the 2% inflation threshold not a high limit, but an average objective over time, i.e. it will not harden not its monetary policy in the event of one-off inflation
Last week started off on a strong note, helped by news on Monday of Gilead Sciences’ USD 21 billion acquisition of Immunomedics and chipmaker Nvidia’s USD 40 billion purchase of ARM Holdings. Software giant Oracle reported on …
Some regions of Europe are returning to lockdown – for instance some districts of Madrid badly hit by the second wave of the pandemic. Yet, for now these lockdowns are very different from the ones imposed in March and April:
Key points The divergence between a decisive Fed and a more hesitant ECB is an interesting debate but it hides the fact that on both sides of the Atlantic monetary policy through its traditional transmission channels is facing diminishing returns.
The US Stocks drifted higher through much of last week, although the catalysts for the move were perhaps harder to identify than usual, and trading was subdued relative to recent months. The week’s busy economic calendar appeared to play some
Aggressive interest rate cuts, liquidity provisions and quantitative easing worked well. Buying facilities rather serve as a backstop. Based on a diminishing marginal effect from Large Scale Asset Purchases (LSAP), the Fed might do more for longer to support
Credit Continuum Monetary stimulus measures and high levels of cash continue to support spread tightening between now and year end. The rally in credit markets has continued in May given Federal Reserve and European Central Bank support measures and the
Central Banks: interest rates near zero The Fed kept its interest rates unchanged. The ECB kept its interest rates unchanged. No movement on BoJ interest rates since 2016.
Week Ahead Focus: ECB Council meeting, EU Recovery Fund The ECB’s Governing Council is to meet next week. We expect the PEPP purchasing program to be increased by EUR 500bn. While the Governing …
Research & Strategy Insights The European Commission “doubled down” on the Franco-German initiative and came out with a bigger quantum for its “Next Generation” package and proposals for new “own resources”. This is politically important. While we are still very
In March, the ECB activated a “pandemic emergency purchasing program” (PEPP) for a an additional €750bn. In total, the ECB have approximately …
#21 A variety of publications in this week’s Top Five, please see below the best read publications: On the fifth place, Blackrock‘s Weekly Commentary “Europe bond outlook under review“: Including their weekly chart: Neuberger Berman‘s “Asset Allocation Committee Outlook 2Q20”
The ECB has to deal with a nasty form of circularity: doubts on its capacity to break its self-imposed limits – further fueled by the recent decision of the German Constitutional Court – trigger bond offloading in some of …
Quality Report 2019 This annual report provides a quality review of the quarterly euro area and national financial accounts. The report fulfils the formal requirement for the Executive Board of the European Central Bank (ECB) to inform its Governing Council
Issues note on liquidity in the corporate bond and commercial paper markets, the procyclical impact of downgrades and implications for asset managers and insurers The coronavirus (COVID-19) pandemic and the measures necessary to contain it have brought a severe and
#20 – Top Five Best Read Research on OpinioPro And it’s Saturday again: the day for us to publish our Top Five Best Read on OpinioPro this last week. Populair tags were ‘asset allocation‘ and ‘equities‘, furthermore our event calendar
April 2020 The Covid-19’s economic damages start to be felt, we expect an unprecedented GDP contraction in Q2 in both, Europe and the US. Tentative signs of recovery in China. The policy action in the US has been quick and
The court ordered the German government to ensure the ECB carried out a “proportionality assessment” of its vast purchases of government bonds. Whilst the ECB should be successful in proving that its purchase scheme was necessary and “proportional”, further expansion
Weekly commentary A decision by the German constitutional court last week could potentially undermine the independence of the European Central Bank (ECB) – and threaten to fuel fragmentation within the euro area in the long run. This comes as the
The results of Q2 2020 ECB Survey of Professional Forecasters (SPF) have to be seen in the context of the outbreak of the coronavirus (COVID-19) pandemic and subsequent mitigation measures. 1 Expectations for euro area inflation, growth and unemployment were
Research & Strategy Insights Most continental European countries have by now relaxed the conditions of their lockdown to some extent or are about to do so. We continue to expect a much better second half of 2020, but we are
2019 marked the 20th anniversary of the introduction of the euro, and support for the single currency among euro area citizens reached an all-time high of 76% in the November Eurobarometer poll.
Week Ahead Focus: German Federal Constitutional Court ruling, US Labor Market Report, Eurozone public debt This week, the German Federal Constitutional Court ruled on a lawsuit against the purchase of government bonds by the ECB and thus the Bundesbank under
Rates in lockdown for longer With the outbreak of the coronavirus hitting the global economy, central banks have stepped up to the plate by delivering significant amounts of easing. Official yields are now at or below zero for all developed
Research & Strategy Insights Flows of new bank loans to the corporate sector reached a record high in March in the Euro area, and the European Central Bank (ECB)’s Bank Lending Survey suggests that credit institutions are planning to ease
Short Note ECB ECB Council Meeting At its meeting which ended today, the Governing Council decided on two further measures aimed primarily at ensuring that banks had sufficient liquidity at low interest rates. The ultimate goal is to keep lending
Week Ahead Focus: ECB, Eurozone Q1GDP and Inflation, US Fed and Q1 GDP In the current environment, central banks are not waiting for scheduled meetings to make decisions, which reduces the importance of these meetings. For example, since the last
Gilles Moëc's Macrocast As advanced economies are on the brink of exiting lockdown, we explore again what could be the profile of growth this year. Mechanically, entering and exiting lockdown, even gradually for the latter, would result in massive gyrations
Central Banks: interest rates near zero The Fed lowered the benchmark interest rate to 0%-0.25% after its second emergency cut in less than two weeks. The ECB keeps its rates unchanged. No movement on BoJ interest rates since 2016.
Scott explains how the extraordinary outbreak-fighting policy action – and recent market turbulence – has changed our view on credit. We see improving outlook for credit – with unprecedented policy action to limit the coronavirus shock in place and sharply
Growth in CEE to dive deeper into negative territory Recent developments have deprived us of optimism and we revise our CEE growth forecast down to -4.7% this year. March PMI indices in Germany and the Eurozone plunged, dragged down by
Statistics Paper Series The Household Finance and Consumption Survey (HFCS) is a joint project of all of the national central banks of the Eurosystem, the central banks of three EU countries that have not yet adopted the euro, and several
Focus: Markets, stimulus packages, Eurozone inflation This week brought massive gains on the stock markets and yield premiums on the interest rate markets fell for the riskier investments. Spreads on Italian government bonds also fell. The markets have thus reacted
Abstract The quality of the geographical breakdown in the balance of payments and related statistics (such as international trade in goods, trade in services and foreign direct investment (FDI) statistics) can be assessed by means of comparisons with mirror data
Key points With the US and broader European economies entering the ‘acceleration’ phase of their respective COVID-19 infection cycles, fiscal policymakers across Europe and the United States have begun outlining plans to bear down on this growing shock to demand
En de impact op het financiële systeem en de markten Het aantal virus besmettingen ligt wereldwijd nu op ruim 218.000 gevallen. Na China en verscheidene Europese landen zet de verspreiding ook in de Verenigde Staten steeds verder door. Het aantal
Focus: ECB and US Fed measures, Eurozone PMIs he measures taken by central banks to counteract the economic downturn have been gathering considerable momentum for a good week now. We have listed the individual measures below. In summary, the central
Containment continues to tighten ; great liquidity stress forces policy action I. COVID-19 update Overseas: COVID-19 continued to spread rapidly in the US & EU; +14,717 new cases overseas; Iran showed early signs of entering the “moderation stage ”. 1,835 new
De voorbije week in een notendop De Amerikaanse economie creëerde 237.000 nieuwe jobs en deed het dus beter dan de verwachte +175.000. De cijfers betreen evenwel een periode waarin nog geen geval van het coronavirus in de VS was gemeld.
ECB Council Meeting he meeting of the Governing Council brought some measures that had been expected, but also some that came as a surprise. The surprise was on the interest side. Not only did the central bank leave all key
Investment Talks ECB action: At its meeting on 12 March, the ECB disappointed market expectations by not cutting rates in the wake of the coronavirus spread. The bank delivered additional unconventional monetary easing thorough a temporary boost to its QE
CIO | View Amid severe market collapses, dramatic corona measures and energetic central banks in the UK and United States, the ECB package was somewhat underwhelming. Even on a "normal" trading day in times of the coronavirus crisis, the package
“Lockdowns” are becoming the norm when dealing with covid-19. They will trigger steep – if hopefully transitory – contractions in GDP. Business cash reserves are scarce in the US, but everywhere credit will need to flow to avoid second-round effects
Spotlight: Fixed Income While the virus was the dominating theme in politics, economics, sports, daily life and border management (just to name a few) the financial markets have reacted with another strong sell-off across asset classes last week. This document
Special | Financials & Covered Bonds | Eurozone In conjunction with the announcement by the Governing Council of additional liquidity support and increased asset purchases (see ECB Short Note of 12 March 2020), the ECB Banking Supervision announced a number
A déjà vu of 2008 in markets lately? Mike explains why we think the coronavirus shock should not spark a 2008-style crisis. The coronavirus outbreak is set to deliver a sharp and deep economic shock – akin to that of
Today the UK monetary and fiscal authorities provided a sizeable, coordinated package of measures to support the economy in the face of the COVID-19 outbreak. Such clear coordination between the Governor of the Bank of England and Chancellor of the
