Kiosque économique

  • Edition September 22, 2016

    US: Fed policy unchanged in September as FOMC eyes December rate hike

    The FOMC, as widely expected, opted for unchanged policy at its September meeting with the Fed funds target range maintained at 0.25% to 0.50%. Market participants saw a relatively low probability for a rate hike with policymakers split over the near-term rate normalization path. We look for the FOMC to hike the Fed funds rate by 25 bps on 14- December. Chair Yellen's comment that the case for a rate hike has strengthened was echoed in the statement. Moreover, the FOMC noted that the "near-term risks to the economic outlook appear roughly balanced."

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  • Edition September 9, 2016

    ECB: think different

    The ECB did not officially extend QE, but they clearly pointed towards a change in the modalities over the near-term ("tasked the relevant committee"); we see it as a step towards an official extension in October or in December this year, along with an easing of purchase modalities, probably a removal of the deposit rate floor.

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  • Edition 6 September 2016

    ECB: Chronicle of a QE Extension Foretold

    Paradoxically, the six-month 'official' extension of QE is insignificant, despite amounting to EUR480bn: QE is already in open-ended mode and markets are already convinced that it will run beyond March 2017. As long as markets continue to expect the extension, the timing of its announcement matters little. President Mario Draghi will, we expect, point to the extension on Thursday to ensure this remains the case.

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  • Edition August 23, 2016

    Spain: A government would not mean the end of political uncertainty

    In spite of a renewed extension of the deadline to correct the deficit, full compliance with the Stability and Growth Pact is still at risk given the current political deadlock. Until a consensus about constitutional, geographical and fiscal reforms is reached, political uncertainty will linger and weigh on fiscal metrics. Sustained nominal growth and exceptionally favourable financing conditions should nonetheless allow the fiscal deficit to decrease gradually.

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  • Edition 18 August 2016

    US - July FOMC minutes: door remains open to rate hike this year

    FOMC voters thought it was appropriate to wait for additional information in order to gauge the underlying momentum in the labor market and economic activity before taking another step in removing monetary accommodation. "Most participants anticipated that economic growth would move up to a rate somewhat above its longer-run trend during the second half of 2016 and that the labor market would strengthen further." We believe that Chair Yellen is willing to test the downside of the natural rate of unemployment in order to meet the Fed's maximum employment mandate.

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  • Edition August 16, 2016

    ECB QE bond scarcity (3 of 3): your move, Mario

    We have analysed the scarcity issue for German bonds as it is the most obvious impediment to the smooth running of the purchase programme until a suitable end time. Our conclusion was not extremely reassuring as it pointed to difficulties for the ECB starting this winter.

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  • Edition August 8, 2016

    US: Robust payroll gains continued in July

    July nonfarm payrolls rose by a robust 255K. The 3-month moving average of payroll gains moved up to 190K in July. We look for average monthly payroll gains to decelerate this year with the economy near full employment. The July unemployment rate was unchanged at 4.9%. Alternative labor slack measures were generally stable. The participation rate rose to 62.8%.

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Edition August 23, 2016

Spain: an ambitious fiscal adjustment still required in 2017-18

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