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Wednesday, October 12

12th Oct - Brexit a cure for Dutch disease?

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ECB may review QE options but decision could be put off until DecReuters

Germany Pressures Deutsche Bank to Speed Overhaul BB

Ashoka Mody: Plummeting GBP good news for Britain – The Independent
Soft Brexit - It's not that hard – Polemic’s Pains
Editorial: Theresa May's Confusing New 'Conservatism' – View / BB
Martin Wolf: Markets have taught May a hard lesson on sovereignty – FT
Sterling: Has the Breaking Point been Reached? – Marc Chandler
Brexit and Britain’s dutch disease – FT

Fearful Of Losing Credibility, No Hike Was Close Call – ZH
Divided committee, hike will depend on incoming data – Danske Bank
Fed closer to rate hike, but inflation doubts remain – Reuters
The Fed’s September Minutes, Annotated – BB

Financial forecasts: Going easy - October 2016 Nordea
Brexit repercussions have so far proven very limited but several uncertainties will keep risk appetite cautious for now. The case for easier policies remains strong for many central banks. On the tightening path, we expect the Fed to proceed more carefully, which will mean even less upside pressure for global yields. GBP should be close to bottoming, while oil prices will continue to rise gradually.

EM FX: Financial forecasts – October 2016Nordea
The road just ahead of us could be bumpy for EM FX. The calendar is loaded with external risks, such as the US elections and a December Fed hike, and domestic political risks are elevated in many countries. Moreover, EM FX correlations with risk perception benchmarks are very high. 2017 looks much brighter, though. We are gradually becoming more optimistic about Emerging Markets in general and EM FX in particular. We have made marginal changes to the forecasts for MXN, HUF and TRY.

Hysteresis and fiscal policy during the Global Crisis vox
Antonio Fatás, Lawrence Summers: Conventional wisdom on supply and demand suggests that demand shocks are cyclical or transitory, and that only technology shocks are responsible for trend changes. This column argues that cyclical events can have permanent effects on demand, and therefore GDP. It is time for policymakers to start considering the possibility of hysteresis seriously.

IMF Research BulletinIMF
A New Look at Bank Capital * Does Growth Create Jobs? Evidence for Advanced and Developing Economies * Seven Questions on Rethinking the Oil Market in the Aftermath of the 2014–16 Price Slump * 17th Jacques Polak Annual Research Conference * IMF Working Papers

Thai Stocks, Currency Plunge On Concerns Over King's Health, Fed Hike ZH

Danske DailyDanske Bank

FOMC minutes awaited, GBP higher, CNH yields spiking * New financial forecasts – changes to central bank calls. Shockingly low Swedish inflation prompts a changed Riksbank call. Stronger GBP on receding fears of a hard Brexit.

Morning MarketsTF
As European markets open for the mid-week session participants will be monitoring the British pound and wondering about the sustainability of the recovery it achieved overnight.

Euro wrap-upDaiwa

Daily Market CommentMarc Chandler
May Concedes to Parliament, Sterling Rises after Pounding

Daily Market Comment Macro Man
Attempting to quantify the impact of sterling weakness

Daily Press SummaryOpen Europe

Brussels PlaybookPolitico

Global Stocks Pressured By Weak Earnings, Rate Hike Concerns; Pound Jumps


FX UpdateTF
Sterling managed a sharp rally overnight albeit one preceded by a steep selloff as May’s stance on parliamentary involvement in the Brexit process has softened. Elsewhere EURUSD has finally broken lower and is focusing on the 1.1000 area next.

From the FloorTF
Sterling was headed towards the 1.20 trapdoor overnight before prime minister Theresa May relented on her 'hard' Brexit stance but was her move reflective of a genuine shift in her stance or merely just tactical?

Julkaisimme uudet keskuspankki- ja markkinaennusteet * Punta oli taas erittäin volatiili illan ja yön kaupankäynnissä * Odotamme Riksbankin leikkaavan korkoaan inflaation hidastuttua * Fedin syyskuun kokouksen pöytäkirjat julkaistaan illalla