Ignoring years of stagnation, economic deterioration, and an unprecedented unemployment rate, which remains stubbornly in the double-digits for countries like Greece, Spain and Italy, Europe appears to have finally woken up, shocked by the reality of Brexit and the Trump election, and has started with the fire and brimstone warnings. Case in point: French prime minister Manuel Valls, who speaking in Berlin, said that the European Union is in danger of breaking apart unless France and Germany, in particular, work harder to stimulate growth and employment and heed citizens’ concerns.
“Europe is in danger of falling apart,” Valls said at an event organized by the Sueddeutsche Zeitung newspaper. “So Germany and France have a huge responsibility.”
Translation: confirming what we have said for years, the ECB did nothing for the economy while propping up markets, refuting the long-running official narrative, and now it is time to actually focus on the people, ideally by launching a massive fiscal spending stimulus.
German Chancellor Angela Merkel said on Saturday that Britain could not get concessions on the freedom of movement while retaining full access to the European single market, or other countries would want the same.
Britain, which is leaving the European Union, faces the challenge of securing a new trading deal with the EU while also giving London more control over migration from the bloc, potentially falling foul of the EU’s freedom of movement principle that is key for accessing its single market.
“If I start making concessions on the freedom of movement, then another country will tomorrow come and say: ‘I don’t want so many Bulgarians and Romanian workers either’,” Merkel told a conference of the youth wing of her Christian Democrats (CDU).
“And then a third country will come and then the extreme forces from Europe will come and then we’ll soon all be closing our borders again and not having any freedom at all and then that’s no longer Europe,” she added.
The IEA forecast that the surplus in global oil markets will last for longer than previously thought.
Philippine President Duterte called for US troops to leave the southern island of Mindanao.
Relations between Poland and the EU are deteriorating.
Former head of Brazil’s lower house Eduardo Cunha was expelled and banned from public office for eight years.
Brazil’s central bank cut the amount of daily reverse swap contracts sold to 5,000.
In the EM equity space as measured by MSCI, Thailand (+2.2%), Qatar (flat), and Indonesia (-0.1%) have outperformed this week, while Colombia (-4.0%), Brazil (-3.4%), and Taiwan (-3.0%) have underperformed. To put this in better context, MSCI EM fell -2.7% this week while MSCI DM fell -0.9%.
In the EM local currency bond space, South Africa (10-year yield -6 bp), Czech Republic (+1 bp), and China (+1 bp) have outperformed this week, while Hong Kong (10-year yield +20 bp), the Philippines (+18 bp), and Russia (+16 bp) have underperformed. To put this in better context, the 10-year UST yield rose 1 bp this week to 1.69%.
In the EM FX space, ZAR (+0.8% vs. USD), PLN (+0.7% vs. EUR), and CNH (+0.6% vs. USD) have outperformed this week, while MXN (-3.7% vs. USD), KRW (-2.1% vs. USD), and MYR (-1.4% vs. USD) have underperformed.
Chancellor Angela Merkel says that Russia’s conflict with Ukraine has deeply unsettled NATO’s Eastern European member states and that the Baltic states and Poland therefore “need a clear reassurance by the alliance.”
The chancellor addressed German Parliament ahead of the NATO summit on Thursday.
Merkel also said that despite loss of trust in Russia, NATO would continue to follow a dual strategy of both deterrence and dialogue toward Russia.
The chancellor pointed out that NATO is facing other conflicts and that “in a turbulent world” the alliance needs to deal with the consequences of the civil war in Syria, the instability in Iraq and conflicts in sub-Saharan Africa. She also mentioned the refugee crisis, the extremist Islamic State group and cybercrime as threats the alliance needs to tackle.
Poland’s central bank has kept its benchmark rate on hold at a record low 1.5 per cent for the 13th consecutive month.
It cut its benchmark interest rate to the current low in March 2015, and it has remained there ever since.
Before the Law and Justice Party came to power, there were fears among analysts that it would put pressure on the central bank to ease policy further in order to accommodate its lavish spending plans, but that has yet to materialise into a move in interest rates.
Even so, the policies of the eastern European country’s new government have been subjected to intense scrutiny of late by credit rating agencies. In January Standard & Poor’s slapped Poland with its first ever downgrade, while earlier this week Moody’s warned that the country’s current constitutional crisis is potentially damaging to its credit rating.
developments in Swedish economy have been somewhat stronger than expected, while global uncertainty remains
sees repo rate averaging -0.41% in Q4,2016 as prev forecast
today’s decision was unanimous
highly prepared to make policy more expansionary even between mon pol meetings
Never underestimate the capacity for Nordic central banks to drop a surprise. Today, though, Sweden’s Riksbank has decided to hold its key rate at a super-low minus 0.35 per cent, as expected.
In a statement, the central bank said developments in the Swedish economy had been “somewhat stronger than expected” – a cheerful note that has kicked the krona higher. One euro now buys SKr9.2857, a decline of 0.4 per cent on the day.
As UA Today reports, foreign appointments have become a key part of Ukraine’s mission to reform its economy and crack down on corruption (and ensure American interests are taken care of?) and now boats 3 non-Ukrainian cabinet members. And now a 4th non-Ukrainian – Estonian Jaanika Merilo – will step up to the plate ‘tasked with bringing more foreign investment into Ukraine and improving the country’s business climate’. We suspect she will have some success…
As fighting between the army and Russian-backed rebels rages in eastern Ukraine, preparations are under way near its western border for a joint military exercise this month with more than 1,000 troops from the U.S. and its allies.
The decision to go ahead with the Rapid Trident exercise Sept. 16-26 is seen as a sign of the commitment of NATO states to support non-NATO member Ukraine while stopping well short of military intervention in the conflict.
The annual exercise, to take place in the Yavoriv training center near Ukraine’s border with Poland, was initially scheduled for July, but was put back because early planning was disrupted by the crisis in the eastern part of the country.
“At the moment, we are still planning for [the exercise] to go ahead,” U.S. Navy Captain Gregory Hicks, spokesman for the U.S. Army’s European Command said Tuesday.