Summary: European Court of Justice could rule on July 19 that private investors do not have to be bailed in before public money can be used to recapitalize banks. Italy stands to gain the most, at least immediately, from such a judgment. Italian bank shares recovered after initial weakness. After the 2007-2008 bank recapitalization by governments, which means taxpayers’ money, Europe changed the rules. The...
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Summary: Electoral politics remains significant. BOE is likely to cut rates, while BoC may tilt more dovishly. US Q2 earnings season formally begins. Investors are under siege. A growing proportion of bonds in Europe and Japan offer negative yields. The German and Japanese curves are negative out 15-years, while one cannot find a positive yield among any tenor of Swiss government bonds. Despite a string of...
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Summary If conditions are exceptional, isn’t BOJ intervention more likely? If conditions are exceptional, the ban on European government supporting banks might not be valid. Italy is leading the charge in Europe. How exceptional are market developments? Much rests on the answer. If these are extraordinary circumstances, then Japanese intervention becomes more likely. Of course, Japanese policymakers have been...
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