Tag Archives: 2) Swiss and European Macro

Over the past 10 days, the euro has declined significantly against the US dollar. On 26 April, the EUR/USD rate moved below the low of its 1.21501.2550 trading range, which had been in place since 18 January. Reasons for this decline can be found in the growth differential and monetary policy divergence. Indeed, moderation in leading indicators (from elevated levels) in the euro area and a cautious ECB (given muted...

The KOF Economic Barometer for April points to an almost stable economic development. It has risen minimally, by 0.2 points, to 105.3 points. Although the Barometer currently does not reach the positive values seen at the turn of the year 2017/2018, the current value is clearly above long-term average. The Swiss economic outlook remains favourable. In April, the KOF Economic Barometer rose slightly to 105.3...

Another ECB meeting, another balanced message of confidence and prudence. Unsurprisingly, the statement mentioned the deterioration in the data flow since March, but our impression is that the ECB is largely brushing off concerns about a soft patch in the economy for the moment. Indeed, Mario Draghi described the recent “moderation” in growth as the result of a pullback in sentiment from elevated levels, with economic...

Neuchâtel, 26 April 2018 (FSO) – In 2016, 11.4 billion francs were spent on the environment, equivalent to 1.7% of gross domestic product (GDP). Since 2008, environmental expenditure has increased by 5%. Two thirds were spent on wastewater and waste management. Overall, expenditure in these two areas decreased by 5%, while it increased by 34% in the other environmental sectors. These initial estimates are based on the...

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners. Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade...

The digital revolution has launched a wave of innovation in the world’s cities, says MIT’s Carlo Ratti, providing opportunities to improve urban mobility and create better workspaces for the changing nature of work. These are exciting times for cities, according to Carlo Ratti, Director of MIT’s Senseable City Lab and co-founder of Carlo Ratti Associati architecture studio. Although they occupy just 2 per cent of the...

On 6 April, the Trump Administration announced additional and more severe sanctions against Russia “in response to the totality of the Russian government’s ongoing and increasingly brazen pattern of malign activity around the world”. US sanctions target seven Russian oligarchs, 12 companies controlled by them, and 17 high-ranking government officials. The measures freeze any US assets held by those targeted and cut them...

The ECB’s Governing Council may have to wait a little longer to get a clearer view of where euro area core inflation is heading in the near term. The early timing of Easter this year has made travel-related services prices more volatile. Another reason is that an unexpected drop in core goods inflation has fuelled concerns over a potentially larger FX pass-through. We are not too worried, as weakness in non-energy...

For all the talk about weaker economic momentum and low inflation in the euro area, we would not jump to conclusions in terms of ECB policy. True, downside risks have re-emerged over the past couple of months, generating understandable concerns and frustration in Frankfurt. However, the ECB is unlikely to respond unless those risks materialise, which is not our central case. If anything, the soft patch should only...

The U.S. Department of Treasury has just published its semi-annual report on International Economic and Exchange Rate Policies. It comes at a time when the US Administration remains deeply concerned by the significant trade imbalances in the global economy. The report only focuses on the US’s 12 largest trading partners, which collectively account for more than 70% of the US’s trade in goods. Although Switzerland is...