Trump Towers over €Area political risks: periphery yields and € pressurised

This piece considers the macro-financial implications of the Euro Area’s political risks, in greater market focus following Donald Trump’s election win (which I argued was underpriced), focussing on the 4 December Italian Consitutional Referendum.  Overall, further politics-driven market volatility seems likely, even if political concerns eventually dissipate. The main points are: Financial markets’ previous under-pricing of … More Trump Towers over €Area political risks: periphery yields and € pressurised

Tracking the macro-financial impacts of Brexit uncertainties: Killing the goose that lays the golden eggs?

Tuesday’s IMF warning of the adverse (global) impacts of a Brexit vote, with some effects already apparent, follows concerns in the March MPC minutes (which seem likely to be amplified in Thursday’s April MPC minutes).  Unfortunately, neither provided any specific evidence. This post fills that gap, detailing the macro-financial impacts evident thus far, drawing on … More Tracking the macro-financial impacts of Brexit uncertainties: Killing the goose that lays the golden eggs?

Draghi fires credit-easing bazooka but undermines market impact

The ECB today vindicated my arguments for an aggressive broad monetary policy easing: rate cuts, QE expansion and credit easing at very attractive rates exceeded market expectations but were more in line with my views (I’d hoped for a 20bp deposit rate cut, accompanied by tiering of interest rates, rather than the whole rate corridor … More Draghi fires credit-easing bazooka but undermines market impact

Portugal: PSPP dominating electoral uncertainties and macro vulnerabilities

Uncertainty about the Portuguese political situation has persisted after the inconclusive 4 October election. Below I discuss how: (i) a minority centre-right (PaF-led) government remains the most likely outcome but the chances of a left-wing coalition seem to have risen and the uncertainty could persist for several weeks; (ii) several cyclical/structural vulnerabilities mean that Portugal’s … More Portugal: PSPP dominating electoral uncertainties and macro vulnerabilities

ECB monetary policy account to highlight sensitivity to downside risks (VW crisis a fresh macro risk)

In the following I discuss what we might learn from Thursday’s ECB monetary policy accounts, reiterate my view on the likelihood of ECB easing (likely in December) and offer some thoughts on the potential adverse macro impacts of the VW diesel engine scandal. ECB monetary policy accounts Thursday’s ECB monetary policy account (minutes) will be … More ECB monetary policy account to highlight sensitivity to downside risks (VW crisis a fresh macro risk)