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  Euro-zone forecasters are increasingly predicting that the European Central Bank will resume interest-rate cutting after a pause with a reduction below 2% in 2026. “The impact of Trump’s trade wars will be more significantly felt in the EU than, say, the UK, meaning that the ECB will need to bring its policy rates below neutral.” Bloomberg 17 February 2025 https://www.bloomberg.com/news/articles/2025-02-17/ecb-rate-cuts-watchers-are-now-forecasting-even-lower-rates-for-2026

  Consumer prices advanced 2.5% from a year ago Core inflation, which strips out volatile components, stayed higher than anticipated at 2.7% unchanged inflation in Germany and France, and accelerations in Italy and Spain. Bloomberg 3 February 2025 https://www.bloomberg.com/news/articles/2025-02-03/euro-zone-inflation-unexpectedly-quickens-backing-ecb-caution

France’s 2025 public deficit will represent 5.4% of its gross domestic product  Bayrou also said the European Central Bank should be cutting interest rates. “Otherwise, we won’t be on the same footing against Chinese and US competition,”  The ECB has made five cuts to 2.75% since June amid stalling growth in the region. Bloomberg 2 February 2025 https://www.bloomberg.com/news/articles/2025-02-02/french-government-to-seek-budget-adoption-monday-premier-says

ECB sänker styrräntorna med 0,25 procentenheter.  Den nya inlåningsräntan landar därmed på 2,75 procent. https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-30-januari-2025.html ”Vid denna tidpunkt är vi fortfarande i restriktivt territorium och vi har inte diskuterat ännu när vi ska stoppa” DI 30 januari 2025 https://www.di.se/analys/rantegapet-kan-bita-tillbaka/ The ECB cut rates, and markets are convinced more will follow The critical question now is to identify the neutral rate, known in the jargon as r*, at which policy is neither restrictive nor accommodative.  Lagarde said that ECB monetary policy remained restrictive, but...   conditions in the banking system  — more important in Europe than in the US where many companies rely on bond finance — remain looser than for most of the time since the Global Financial Crisis began in 2007. Another sign of growing resilience comes from banking stocks.  Brutalized by the GFC and by the euro-zone sovereig...

  Financial Times 7 January 2025 https://www.ft.com/content/c694e7b9-9c40-482e-b087-c14c8ee8e2e1 Tillbaka till Rolfs länktips 7 januari 2025 https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-7-januari-2025.html

  The European Union should consider taking bolder steps such as confiscating frozen Russian central bank assets to compensate Ukraine, the bloc’s top economic official said, downplaying risk warnings from the European Central Bank. The EU’s diplomatic service is conducting fresh assessments of the financial and economic risk of confiscating Russian assets and hand them over to Ukraine, Bloomberg previously reported.  https://www.bloomberg.com/news/articles/2024-12-17/eu-takes-a-fresh-look-at-confiscating-russia-s-frozen-assets Euroclear Ltd., a Brussels-based clearing house, holds the largest tranche of Russia’s immobilized deposits, totaling €180 billion. Valerie Urbain, its chief executive officer, has warned that confiscating assets would be risky. Several member states, including Germany, Belgium and Luxembourg, and the ECB remain concerned that confiscation could breach the principle of a state’s immunity under international law and impact the euro as a reserve currency,...

 Internal watchdog says fund needs to tackle claims that large loans reflect political pressures Rules for outsized loans to countries such as Argentina, Ukraine and Egypt needed an overhaul as “perceptions of a lack of even-handedness” were affecting the fund’s credibility, the IMF’s independent evaluation office said in a report on Thursday. The fund’s biggest lending commitment is to Argentina, where President Javier Milei is seeking a new $10bn loan, on top of $44bn the country tapped since 2018 under the exceptional access rules. Financial Times 12 December 2024 https://www.ft.com/content/c5d7ec69-7c4a-48f5-ba29-c651e52240cd Argentina, IMF och Lagarde IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated. The fund has an unhappy history with Argentina, having agreed more than 20 programmes, most of which ended in failure.  The latest chapter started with a $50bn bailout in June 2018, increased by $7bn...

 ECB-chefen Christine Lagarde sade vid en pressträff att tillväxten har förlorat momentum, och det fanns en viss diskussion om att sänka 50, men de var eniga om 25.  De hade inte talat om var den neutrala räntan ligger.  https://www.di.se/nyheter/ecb-sankte-rantan-europarantorna-steg/ Tillbaka till Rolfs länktips 12 december 2024 https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-12-december-2024.html

France will have to face the discipline of the global debt markets on its own. The European Central Bank (ECB) cannot legitimately intervene to hold down French borrowing costs unless, and until, the country faces a full-blown financial crisis. If the ECB were to abuse its legal powers to let France off the hook, it would set off a political and legal storm, and further erode German confidence in the management of the euro. Article 16 – the constitutional clause that allows him to assume emergency powers. The powers can be invoked if there is a threat to the “execution of France’s international obligations”.  Macron could reasonably argue that failure to pass a budget prevents the country from fulfilling its EU treaty commitments. Charles de Gaulle invoked Article 16 in 1961 following the Algiers putsch by retired army officers The ECB cannot salve French amour propre. It was able to prop up high-debt countries during the deflation years by purchasing €5 trillions (£4.1 trillions) ...

Joe Davis, who leads the $10tn asset manager’s investment strategy group, Vanguard, said investors have gone too far in their bets on AI’s potential The cautious remarks from the world’s second-largest asset manager add to the fierce debate among investors over whether groups that rode the AI wave are overvalued after huge gains in recent months. Financial Times 3 December 2024 https://www.ft.com/content/8b5c4611-0957-4bca-a6e9-ad608c865a64 Bridgewater offers “holy grail”  The world’s largest hedge fund by assets has cautioned clients against betting on a continued unchallenged rally for U.S. stocks, and offered up what they called the “holy grail” of portfolio protection. MarketWatch 5 December 2024 https://www.marketwatch.com/story/worlds-biggest-hedge-fund-flags-the-holy-grail-that-may-shield-investors-if-u-s-stock-rally-crumbles-2f2d952b Last week, the European Central Bank added its voice to those urging caution, noting in its regular financial stability review that the  ...

Just after the onset of the 2007-08 global financial crisis, disclosures of financial mismanagement in Greece almost plunged the country into bankruptcy and resulted in a loss of confidence in bond markets. A number of countries experienced big increases in government borrowing costs, with yields on government debt in Ireland, Italy, Portugal and Spain rising from about 2% in 2009 to between 7% and 20% in 2011,  and Greek 2-year bond yields rising to 200% in 2012 In addition, the crisis threatened the survival of the euro, which was introduced in 1999. A French sovereign-debt crisis would be a problem for the eurozone, economist says Vivien Lou Chen MarketWatch 3 December 2024 https://www.marketwatch.com/story/u-s-investors-watch-french-budget-mess-amid-memories-of-eurozone-debt-crisis-c1118671 Quantifying the Impact of ECB Policies during the Debt Crisis https://www.nber.org/digest/feb18/quantifying-impact-ecb-policies-during-debt-crisis We use open market operations to steer inte...

Centrist and left-wing tactical alliances designed to thwart Marine Le Pen’s National Rally from taking a majority of seats, thus producing an unworkable parliament divided into three roughly equal blocs — Le Pen and Macron’s groups, plus an ungainly left-wing coalition.  Le Pen is now aiming to show that she holds the power in this situation It’s possible that Le Pen is bluffing The Franco-German axis remains at the heart of the EU. It looks unlikely to set a budget within the agreed euro-zone parameters, and so the issue casts doubt on the currency area’s viability ECB might buy French bonds to help, but Barclays argues that it’s unlikely to do so because of requirements that French public debt be on a sustainable path. It could, however, act to rein in any contagion to other countries’ bonds. John Authers Bloomberg 2 December 2024 https://www.bloomberg.com/opinion/articles/2024-12-02/france-budget-crisis-is-le-pen-for-turning-macron-and-barnier-can-t-bank-on-it

  Some investors worry we’re in bubble territory, but others think a new paradigm has arrived Last week, the European Central Bank added its voice to those urging caution, noting in its regular financial stability review that the “concentration among a few large firms raises concerns over the possibility of an AI-related asset price bubble”.  That “b-word” is not one you generally want to see in such dry publications. Given the dominance of this theme in US markets, and the dominance of the US over global markets, a disappointment in earnings expectations for these companies poses “the risk of adverse global spillovers” if this all goes wrong, the ECB added.  Katie Martin Financial Times 26 November 2024 https://www.ft.com/content/6e893618-d75e-4e67-9876-249540a27d13 Tillbaka till Rolfs länktips 26 November 2024 https://englundmacro.blogspot.com/2024/11/rolfs-lanktips-26-november-2024.html

  JP Morgan menar på att de senaste PMI-siffrorna för eurozonen öppnar dörren för en dubbelsänkning från ECB.  ”Vi räknar för närvarande med att ECB kommer att sänka räntan vid varje möte fram till nästa sommar till 1,75 procent,  men den senaste tidens svaghet väcker frågor om huruvida den slutliga räntan kan vara lägre – särskilt med tanke på potentiella tullar på europeisk export till USA” DI 22 november 2024 https://www.di.se/live/storbank-det-har-oppnar-for-en-dubbelsankning/ The HCOB flash eurozone composite purchasing managers index fell to 48.1 in November, a 10-month low “Things could hardly have turned out much worse. The eurozone’s manufacturing sector is sinking deeper into recession, and now the services sector is starting to struggle after two months of marginal growth  https://www.marketwatch.com/story/things-could-hardly-have-turned-out-much-worse-says-economist-on-eurozone-economy-e66d2e83 Tillbaka till Rolfs länktips 22 November 2024 https://englund...

  Some senior policymakers at the ECB are pushing for it to publish the report,  or at least some of its findings,  to counter heavy lobbying by the banking sector to water down rules implementing the Basel agreement on global capital requirements in the sector. The so-called Basel III package is an ambitious overhaul of bank regulation agreed by supervisors around the world in the wake of the 2008 financial crisis to limit how much lenders can use their own models to make their balance sheets appear stronger than they would otherwise be.  Financial Times 18 November 2024 https://www.ft.com/content/48f84e00-836d-4659-9d78-60ababfa83ed Riksbanken vill att EU följer Basel III https://englundmacro.blogspot.com/2021/09/riksbanken-vill-att-eu-foljer-basel-iii.html   Regulators in US and Europe roll back Basel III reforms https://englundmacro.blogspot.com/2024/06/regulators-in-us-and-europe-roll-back.html Tillbaka till Rolfs länktips 18 November 2024 https://englundma...

  Kronan har stärkts: (med 1 procent mot euron och 0,4 procent i handelsvägda termer (KIX). Möjligen påminner kronans oväntade kursreaktion oss också om att kronan redan handlas på historiskt svaga nivåer, och redan i våras pekades ut som en av Västvärldens mest undervärderade valutor av IMF.  Nils Åkesson DI 13 november 2024 https://www.di.se/nyheter/darfor-starks-kronan-efter-trumps-seger/ Tillbaka till Rolfs länktips 13 November 2024 https://englundmacro.blogspot.com/2024/11/rolfs-lanktips-13-november-2024.html

  1928 Rally Was Just Like This One; Authers https://englundmacro.blogspot.com/2024/11/1928-rally-was-just-like-this-one.html Fondspararna gör helt rätt som sparar genom att köpa fondandelar både när börsen går upp och ner,  säger Rebecca Jansson, ekonom vid bransch­organisationen Fondbolagens förening. Den totala fondförmögenheten är nu 8,2 biljoner kronor. Wall Street stänger svagt ned https://www.di.se/live/wall-street-stanger-svagt-ned-tesla-foll-tillbaka/ 10Y 4,440 Kraftig nedgång på Stockholmsbörsen. Nedgången var bred och flera indextunga bolag föll tydligt  utan bolagsspecifika nyheter.  https://www.di.se/live/kraftig-nedgang-pa-stockholmsborsen-atlas-copco-och-sandvik-foll / Kaja Kallas: Ryssland måste förlora kriget Estlands förra premiärminister Kaja Kallas har nominerats som efterträdare till spanske Josep Borrell  EU har försett Ukraina med sammanlagt över 980 000 artillerigranater Den svaga europeiska euron https://www.telegraph.co.uk/business/2024...

  Det bereder i sin tur vägen för Riksbanken att sänka räntan snabbbare.  Till exempel med en dubbelsänkning i november. Nils Åkesson  DI 1 oktober 2024 https://www.di.se/nyheter/kyligare-europriser-eld-i-baken-for-ecb/ Tillbaka till 1 oktober 2024 https://englundmacro.blogspot.com/2024/10/wall-street-och-stockholm-1-oktober-2024.html

  Stimulus will probably boost China's stocks for a while. But meaningful improvement will need fiscal policy. John Authers 25 september 2024   https://www.bloomberg.com/opinion/articles/2024-09-25/china-s-credit-bazooka-isn-t-what-it-used-to-be Adrenaline Shot Is Only Buying China a Little Time Tuesday’s hastily arranged briefing delivered a sweeping policy package. Economists say reversing the slump will require much more. Bloomberg 24 september 2024  https://www.bloomberg.com/news/features/2024-09-24/china-s-sweeping-stimulus-package-buys-economy-time-but-won-t-end-slump Lagarde's Bazooka Isn't Big Enough for This Crisis Central banks are doing all they can. Governments need to respond with fiscal policy. John Authers Bloomberg 19 mars 2020 https://www.bloomberg.com/opinion/articles/2020-03-19/lagarde-s-ecb-bazooka-needs-fiscal-support-from-governments   Does a big bazooka matter?   Central bank balance-sheet policies and exchange rates https://www....

  Supervisors at the European Central Bank were sure interest rates would eventually rise, ending a decade of ultra-loose monetary policy that had encouraged risk-taking.  Yet banks were largely ignoring their guidance to curb lending to highly indebted companies, challenging the institution’s authority. Officials have already more than halved their initial estimate of the extra provisions they want banks to make.  Just nine months into her term, Buch — a former Bundesbanker known for being tough on banks — now finds herself in the uncomfortable position to decide how much more the watchdog will walk back its demands. Then, in September 2023, the crackdown intensified with work starting on a thematic review across 12 banks operating in the European Union that had large leveraged finance exposures, or where leveraged finance was a big part of the overall business.  The banks under scrutiny included heavyweights Banco Santander, Deutsche Bank, BNP Paribas and Societe G...