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Home / Tag Archives: 2) Swiss and European Macro

Tag Archives: 2) Swiss and European Macro

Italy: Back to polls in Q4 2019?

Recent developments in Italy’s political landscape have increased the probability of early elections in Q4 2019, but the situation is not so straightforward. Last week, political tensions in Italy intensified as Matteo Salvini, the League’s leader triggered a no confidence vote against Prime Minister Giuseppe Conte. PM Conte will address the Senate on 20 August. A confidence vote will likely follow the speech, though further delays remain a possibility. Once the...

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New monetary policies for new challenges

As central banks try (yet again) to bolster faltering growth and inflation, it is important to grasp how the ‘style’ and aims of monetary policy-making have changed over time and how they need to evolve in the future. The world is being disrupted by structural trends such as populism, demographic and climate change and technological innovation. Likewise, with previous approaches producing fewer results, we believe it is time to envisage monetary policies that address...

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Swiss Producer and Import Price Index in July 2019: -1.7 percent YoY, -0.1 percent MoM

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in...

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Swiss Retail Sales, June 2019: 0.7 percent Nominal and 0.7 percent Real

05.08.2019 – Turnover in the retail sector rose by 0.7% in nominal terms in June 2019 compared with the previous year. Seasonally adjusted, nominal turnover rose by 1.4% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO). Real turnover in the retail sector also adjusted for sales days and holidays rose by 0.7% in June 2019 compared with the previous year. Real...

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Swiss Consumer Price Index in July 2019: -0.3 percent YoY, -0.5 percent MoM

02.08.2019 – The consumer price index (CPI) fell by 0.5% in July 2019 compared with the previous month, reaching 102.1 points (December 2015 = 100). Inflation was 0.3% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).The decrease of 0.5% compared with the previous month can be explained by several factors including falling prices for clothing and footwear...

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DATA ADDS TO THE CASE FOR ECB ACTION IN SEPTEMBER

Slowing economic momentum in the euro area means that we are lowering our GDP forecasts for this year. The euro area economy grew by 0.2% q-o-q in Q2, down from 0.4% in Q1. While 0.2% is still a decent pace of growth, concerns about the economy in the second half of the year have increased. Recent data have shown that the industrial slump has started to leave some marks on the domestic economy. Tentative signs of...

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World’s Central Banks End Pact That Limited Selling Of Gold

In a surprising announcement on Friday morning, the European Central Bank said the 21 signatories of the 4th Central Bank Gold Agreement (CBGA) “no longer see the need for formal agreement” as the market has developed and matured, and as a result the signatories “decided not to renew the Agreement upon its expiry in September 2019.” For readers unfamiliar, the first CBGA was signed in 1999 to coordinate planned gold...

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BREXIT UNCERTAINTY TO WEIGH ON YIELDS

We expect the BoE to cut rates in November, even if a Brexit deal is reached by October. UK sovereign bond (gilts) yields have fallen this year, with the 10-year yield dropping by 59 basis points (bps) to 0.69%1, in concert with other core sovereign bond yields. The Brexit saga, along with the global slowdown forcing many central banks to turn dovish, are the main factors behind this steep fall. Taking stock of this...

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Germany Struggles On

The popular image of the German industrial machine politics is one which has Germany’s massive factories efficiently churning out goods for trade with the South of Europe (Club Med). Because of the common currency, numerous disparities starting with productivity differences had left the South highly indebted to the North just as the Global Financial Crisis would strike. The aftermath of that crisis, particularly the...

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DM credit caught between opposing forces

Despite the impressive year-to-date performance of corporate credit, we remain prudent about prospects in the remainder of 2019. Corporate bonds have posted stellar total returns year to date, thanks to the positive combination of lower sovereign yields and tighter credit spreads. While high yield (HY) bonds have performed slightly better than investment grade (IG) ones on both sides of the Atlantic, the additional...

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