After an 11-hour marathon of negotiations in Brussels, the euro area’s heads of state sealed an agreement in response to the crisis at 5 o’clock in the morning on Friday. While a euro break-up is still not completely unthinkable, an exit to the crisis now appears to be feasible. Decisions were taken on two fronts. […]
The European Central Bank, under the helm of its new President Mario Draghi, lowered interest rates by 25bp yesterday. By acting for the second month in a row, the Governing Council confirmed that the deterioration of the economic conditions are sufficiently serious to justify bringing back the refinancing rate to 1%. The refi rate has […]
The second release of the PMI survey for August confirmed the sharp deterioration in economic sentiment. In particular, manufacturing sentiment led the movement with a fall into contraction territory in August (49.0). PMI services resisted, edging only slightly lower from 51.6 to 51.5. Nevertheless, the overall index fell to 50.7 from 51.2 in July. While […]
In accordance with bleak prospects, we are revising down our already cautious GDP forecast. Instead of 0.2% q-o-q growth in Q3 and Q4, we predict growth close to zero in the second half of the year. As a result, the 2011 growth forecast is revised down from 1.7% to 1.5%. As a consequence of a […]
Two regimes alternatively prevail in the currency market. In the first regime, that we call “fundamental”, currencies move in line with economic data and monetary policy developments and expectations. In the second regime, that we call “crisis”, market participants focus on risks. Regimes switch rapidly from one to another, and usually in the wake of […]
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