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Eco Focus

Eco Focus is an aperiodic publication providing up-to-the-minute analysis of a current topic.

UK: Heightened political uncertainty versus hopes for a softer Brexit

  • Edition June 16, 2017

    The 8 June snap election was a shock for Theresa May as it resulted in a loss of the Conservative party's absolute majority in Parliament. Even though she decided not to resign, she is vulnerable to challenges within her party at any time. This hung parliament heralds a period of political instability and significant uncertainty over the sequence of future events. It also opens up a wide range of outcomes for Brexit. Meanwhile, a minority government is unlikely to last its full five-year term, increasing the risk of another snap election.

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Dove profusion

  • Edition June 8, 2017

    There are too many questions, there is no 'one solution', there is no core inflation, there is growth celebration. And an ECB that has provided a profusion of dovish elements to make markets feel, to make markets know that, despite the fact that the wording of the forward guidance changed, the ECB will remain on the path of an accommodative stance for a prolonged period of time.

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United-Kingdom - The approaching snap election and what it means for Brexit

  • Edition June 2, 2017

    On 8 June the British people will go back to the polls for a snap general election. Our base-case scenario is that the Conservatives will extend their parliamentary majority, as suggested by the majority of polls. However, the slump in the Conservatives' lead in voting intentions over the past two weeks suggests that the election's result should not be taken as a foregone conclusion.

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United-Kingdom - Consumers' resilience under scrutiny

  • Edition April 10, 2017

    The resilience of the British economy in the post-referendum period has taken many by surprise. Some made rapid conclusions that ‘Brexit has had no effect on the economy'. To state this, however, is to voluntarily omit that Brexit has not yet occurred. We are still at the very beginning of the negotiation process, which started officially on 29 March. The main effects of the referendum result so far have been through foreign exchange.

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US-Rate hike but little change in views

  • Edition du 16 mars 2017

    As widely expected, the FOMC raised the Fed funds (FF) target by 25 bps to a range of 0.75% to 1.00%. The Fed's median projection for the FF rate at the end of 2017 was 1.4%, implying two additional 25 bps rate hikes this year. This is unchanged from the December projection as was the projection for yearend 2018 at 2.1%, implying 3 additional hikes next year. The longer-run fed funds rate projection remained at 3.0%.

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ECB - Tainted dove

  • Edition 10 March, 2017

    Sometimes the ECB feels it has to run away, it has to get away from the dovish stance it drove into the heart of the Eurozone. The dovish stance seems to be close to an end. It is losing its usefulness… The constructive ambiguity widely used by the ECB at today's press conference confirms our view that the ECB is almost at the peak of its accommodative stance: from now on, it will slow the expectations on monetary policy before actually – very gradually – removing the monetary support.

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ECB: The cat that walked by himself

  • Edition March 8, 2017

    Rudyard Kipling's cat is the wildest animal of the Wet Wild Woods, not because he refuses to respect the bargain negotiated – on the contrary, he respects it whatever happens – but because he respects only the bargain and refuses to submit to any other kind of pressure: man's boot-throwing or the dog's bite. He is the cat that walks by himself. Mario Draghi is ready to do "whatever it takes", "whatever the ECB must", "without any limit" to respect the bargain negotiated in the European Treaty: price stability.

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Italy vs Spain: do fundamentals justify trade?

  • Edition February 3, 2017

    Markets and institutional organisations favour a better recent dynamic in Spain, while Italy stands out as benefitting from a better status on various economic dimensions. Spain has started earlier implementing a series of post-crisis structural reforms, while Italy was standing on a better reform track in the 1990s. The latest impressive round of Italian structural reforms is too young to unveil their impact and has not been fully taken into account by observers.

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US-D.C. Update: From words to acts- fiscal policy obstacles

  • Edition March 1st, 2017

    The Republican's key legislative focus this year is on repealing the ACA and passing a tax reform package. That is a very ambitious agenda that is unlikely to be implemented before next year, in our view. ACA Repeal/Replace: Easier said than done. The current proposals have yet to convince a majority in Congress given concerns for millions who may lose their health insurance coverage in the years ahead and tax hikes for those with generous health care plans. The House leadership plans to move forward with its proposals nonetheless.

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US- Prepping the markets for a hike

  • Edition February 16, 2017

    US economic performance is likely to warrant further gradual increases in the federal funds rate. Chair Yellen reiterated her view that "waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession."

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