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Thursday, April 14

14th Apr - IMF, Brexit, ECB, Italy

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Italy: Unresolved banking-sector issues remain a burden for bondsNordea
While the new bank rescue fund will diminish the chances of near-term recapitalizations failing, the outlook for the Italian banking sector remains grim. Especially, the banks are burdened by considerable contributions to different funds. In addition, the size of the fund is small and the problem of non-performing loans will be solved slowly at best. The prospects of Italian banks supporting economic growth any time soon look slim. We find more value in Spanish than Italian government bonds.

SEK: could the Riksbank lose control of the krona?Nordea
The SEK has a tendency to gain when the global business cycle improves; suggesting not hedging against SEK gains may actually be lowering exporters earnings volatility. However, experiences from the Euro Area, from Japan, and from the past (2013) suggest that the SEK could gain substantially – even if global growth remains weak or even takes a turn for the worse. Could the Riksbank actually lose control of the SEK?

BOE and Brexit Marc Chandler

Bank of England Review Danske Bank
BoE does nothing ahead of the EU in/out referendum

It’s Gotten So Bad in Europe, Even Eurocrats Begin to WorryWolf Street
 “Demands for further escape referendums.”

ECB preview: A balancing actNordea
In March the ECB eased monetary policy substantially but markets took Draghi’s words as hawkish. This time will be different: no action on 21 April, but a dovish outlook that aims at keeping easing expectations alive. The balancing act consists of being dovish without being unrealistic and without letting fiscal and structural policy off the hook. We expect a mildly positive market reaction from the ECB’s point of view, i.e. some EUR weakening and pricing of lower rates.

The ECB can make a difference if deeds match wordsvox
Many claim that monetary policy has hit diminishing returns. They use that as an explanation for the slower economic growth and low inflation in the Eurozone. This column argues that the main problem is that the ECB acted late and with half-measures to the Global Crisis, which was seen as falling short of its promises. The real problem is thus not a lack of ammunition, but a lack of credibility.

Independence and accountability: Congress and the Fed in a polarized eraBrookings
The Fed’s pursuit of unconventional monetary policy in a polarized era has diminished political support for the Fed - weakening the nation’s recovery from crisis and sowing doubt about the Fed’s capacity to fight the next recession.

Staff Note for the G-20: A Guiding Framework for Structural ReformsIMF

April 2016 Fiscal Monitor: Coping With a New RealityIMF
Public debt ratios have worsened almost everywhere and public finances have become more vulnerable * Countries need to adapt, but “no one-size-fits-all” * Fiscal policy should be growth-friendly with a focus on measures that boost both short- and medium-term growth

Lagarde: Decisive Action, Durable GrowthIMF

Bernanke on helicopter money Scott Sumner

Asia monthly: when the wind is blowingNordea
March has been a very good month for Asia FX and EM Asia equities. This is mainly attributable to two of the largest risks, a meltdown of the Chinese economy and the Fed rate hikes, have not (yet) materialised. However, these risks are likely to return to cloud the region later this year.

The New Face of the IMF’s Global Growth StrategyWSJ
Canada's new Liberal government embraces the IMF prescription for global economic health

Danske DailyDanske Bank

Euro rates updateNordea

Equities up, Brent and 10Y Bund yield slightly down * BoE dovish and on hold today, stable US inflation * Core yields range-bound yesterday * Could the Riksbank lose control of the SEK?

Morning MarketsTF
Upbeat Chinese trade data gave US and European markets a lift overnight and lifted sentiment across Asia as well. In Australia the S&P/ASX200 rally rolled on supported by the banks and miners. Leading Aussie miners were buoyant on yet another rise in ore prices which in turn supported the benchmark.

Daily Market Comment Marc Chandler
Greenback Steadies Against Majors, but Firmer vs EM After MAS Surprise

Daily Market CommentMacro Man
US consumption: more or less where it "should" be

Daily ShotTF
Investors surprisingly became very interested in Italian banks which surged more than average in a sector that had a strong day. This is despite plenty of warning signals from institutions such as Fitch.

Daily Press SummaryOpen Europe
Corbyn sets out socialist, ‘warts and all’ case for staying in EU * YouGov poll puts EU referendum neck and neck as ‘short’ campaign gets underway * French Finance Minister: Germans “shouldn’t give up the good habit” of respecting ECB independence * Poland’s constitutional crisis deepens as MEPs back resolution warning of threat to “democracy, human rights and the rule of law” * Tusk describes migrant crisis as “something like a never-ending story” * Greece to seek fixed rate on bailout loan repayments at IMF Spring meetings * Dutch PM to coordinate with EU partners on voters’ rejection of EU-Ukraine agreement * EU-Japan Summit postponed after trade negotiation disputes * EU data protection regulators raise concerns about new US-EU data sharing agreement

Brussels PlaybookPolitico
EU-Japan summit nixed — Big spending on limos and PR

U.S. Futures Flat After Oil Erases Overnight Losses; Dollar In The Driver's Seat


FX UpdateTF

From the FloorTF
The early European session today finds crude oil struggling in an increasingly nervous market and equities narrowly mixed despite a strong showing in both Wall Street and Asia overnight and government and corporate bonds alike ploughing higher amid enhanced risk appetite.

Elvytyspolitiikka pumppaa Kiinaan vauhtia * Tänään luvassa USA:n inflaatioluvut * USA:n vähittäismyynti tuotti jälleen pettymyksen * EURUSD painui USA:n inflaatiolukujen lähestyessä

Miten EMU:a voisi kehittää?YLE
Minkälaisia mahdollisuuksia on parantaa euroalueen taloudellista kehitystä, ja ovatko ylipäänsä nykyiset Euroopan talous- ja rahaliitto EMU:a koskevat säännöt tällä yhteisvaluutta-alueella toimivia. Aiheesta keskustelee ekonomisti Roger Wessman. Ohjelman toimittaa Maija Elonheimo