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United States: GDP growth

Real GDP grew by only 1.3% q-o-q annualised in Q2 2011, below the consensus estimate of 1.8%. Moreover, growth in Q1 was revised down from 1.9% to a very weak 0.4% and in Q4 2010 from 3.1% to 2.3%. This means that average growth in H1 was below 1%!!! (+0.8%). The revisions were part of […]

United States: Debt ceiling drama

The debt ceiling drama is heating up. However, we continue to believe the most likely scenario is that a last minute deal will be struck, bringing some welcome relief to the financial markets. If no agreement is reached ahead of the 2 August deadline (a rather unlikely scenario albeit a possible one), it would obviously […]

United States: house prices

The S&P Case-Shiller index of house prices posted a m-o-m drop of 0.1% in May 2011, against consensus expectations of a flat reading. However, April’s figure was revised sharply up: from -0.1% to +0.4% (see chart). As a result, this seasonally-adjusted index is encouragingly now marginally higher than in March.   May’s readings for the […]

Euro area summit

Yesterday’s extraordinary EU summit surprised positively. Decisions were broader than generally anticipated. The main measures announced are as follows: Greece: downgrade to selective default very likely  New EU/IMF bail-out programme: EUR109bn for funding up to mid-2014. Private Sector Involvement (PSI): Private bond holders are expected to provide some EUR37bn toGreecethrough voluntary debt exchange or rollover […]

European crisis: The week of living dangerously

The intensity of the eurozone crisis has heightened considerably recently. Contagion has spread towards core countries like Italy and even France. Something has been broken. We can already say that the euro of the first decade is dead. The first proof is spreads (see chart below). When interest rates inside the monetary union are as […]

The Swiss franc under intense stress

The safe-haven Swiss franc has beaten new records on several fronts. Against the single currency, the franc reached 1.15, against the US dollar it is slightly above 0.80 and against the British pound it lies at 1.30. Latest developments in the eurozone crisis saga and disappointing economic data in the US have darkened the global […]

Gold reaches new highs with sovereign debt crisis

Gold peaked yesterday slightly above USD 1594, after Ben Bernanke referred, in his twice-a-year economic report to Congress, to the possibility of resorting to a third quantitative easing plan. This sent the dollar lower and the gold price to a new high in US dollars, as well as in euro and sterling. The price of […]

China: Second quarter GDP and June macroeconomic data

Real GDP growth came in at 9.5% in the second quarter, slightly down from the first quarter figure of 9.7%, China’s economy is doing well, despite worries over potential excessive tightening. We believe that the tightening process is over and we expect a smooth economic slowdown during the second semester. For the whole year, the […]

The ECB keeps its word despite the crisis

Despite the current very uncertain environment, the ECB’s Governing Council decided yesterday afternoon to raise its interest rates by 25bp. As a result the corridor between the marginal lending facility and the deposit facility remained unchanged at 150bp. The pre-crisis corridor was 200bp. Yesterday’s decision was taken unanimously and was probably dictated to a large […]

China: Fifth Interest Rate Hike

Today, the People’s Bank of China – the Chinese central bank – announced a fifth interest rate hike of 25 bps on one-year deposit and lending rates to 3.50% and 6.56% respectively. This hike is evenly distributed on both deposit and lending rates over the duration curve – except for demand deposits that were not […]

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