Author Archives: Olivier Desbarres

Chinese trade tantrum

Chinese trade rebounded in June, but from a very low base and overall Asian exports remain depressed. The temptation is to think that Chinese policy-makers will sacrifice a robust renminbi in order to spur economic growth but I expect the PBoC to favour a stable currency while the government focuses on pump-priming domestic demand.

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Greece – Copout still more likely than Bailout or Burnout

Events in the past 48 hours have reinforced my long-held view that a copout – whereby the Troika grants the Greek government new loans in exchange for agreeing to strict reforms – is more likely than a full bailout (including significant debt forgiveness) or burnout (Greece defaults and leaves the eurozone). See Greece Lightening (28 January 2015) and Half-Time: Pass the smelling salts (3 July 2015). Read more

Half-time: Pass Me the Smelling Salts

Few of the big questions being asking at end-2014 have been answered in a convincing way. The Greek saga rolls into its sixth painful month but may finally be coming to at least a temporary conclusion. I still think a copout (new loans in exchange for reform) is more likely than a full-blown bailout (another large debt reduction) or burnout (Greece defaults and leaves eurozone).

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Greece: Too many chefs spoil the broth?

I commented on Twitter on Saturday morning that the “Greek crisis is as much about personalities as it is about cash: Tsipras, Varoufakis, Draghi, Dijsselbloem, Lagarde, Merkel, Tusk, Juncker, Putin, Obama”.  My view was reinforced by former US Treasury Secretary Larry Summers’ argument in a Financial Times article posted Saturday afternoon that “Greece is no longer about numbers. It is about the high politics of Europe”[1]. Read more

Dovish-light Fed seeks comfort in numbers

Yesterday’s Federal Reserve Open Market Committee (FOMC) policy meeting provided few surprises, very gently guiding the market towards a possible September rate hike barring any major surprises in the economic data and outlook. This was broadly in line with expectations and my forecast that the FOMC would deliver a dose of boring to a market that had been on tenterhooks (Fed says it best when it says nothing at all, 17 June 2015). Read more

Fed says it best when it says nothing at all

Portfolio managers, analysts and ultimately the market expect the Federal Reserve (Fed) to keep its policy rate of 0-25bp on hold at today’s meeting. Inflationary pressures remain subdued, economic activity has only started to recover after a lackluster Q1, the dollar TWI has appreciated a further 1.4% since the April Fed meeting and there’s the small matter of whether, or arguably when, Greece may default and the fall-out for the eurozone. Read more

Survey: Fed to lead Bank of England into slow and gradual rate hikes

The over-riding consensus amongst portfolio managers, analysts and finance specialists surveyed is that the US Federal Reserve will start hiking its policy rate before the Bank of England (BoE).

Respondents are less confident about the exact timing of the start of the Fed and in particular BoE hikes. The consensus forecast is for the Fed to pull the trigger in September but for the BoE to wait till Q1 2016. There is an overwhelming view that the rate hiking cycles will be slow and gradual, particularly in the UK, with the Fed and BoE expected to hike rates by only 96bps and 67bps, respectively, between now and end-2016. Read more

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