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Monday, June 17

17th Jun - Fed in focus #4116



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EUROPE
Wolfgang Münchau: European leaders risk no-deal Brexit by sitting on the fence – FT
The EU should help the next UK prime minister by ruling out another extension

Yanis Varoufakis: Fiscal Money Can Make or Break the Euro – Project Syndicate
The parallel payment system that Greece's government proposed in 2015 would have bolstered the eurozone. By contrast, the Italian government's planned "mini-Treasury bills" would lead to the single currency's demise.

The most important job in the EU – Jussi Lindgren
It is absolutely and critically important that the next president of the ECB is of the same intellectual calibre as his or hers predecessor.

Euro Area Article IV Statement – IMF

Euro area rates to stay very low for very long – Danske Bank
Current interest rate levels are not a temporary phenomenon. We do not expect a rate hike for several years, and even beyond that, increases are likely to be very modest.

Eurozone: A rate cut is coming – ING
Just when it seemed that the eurozone economy was starting to improve, the escalation of the trade war between the US and China soured the mood once more. We believe that a 10bp rate cut from the European Central Bank is now on the cards in the second half of 2019

Euro area - At inflection point – Danske Bank
Recession risk remains low despite a tougher external environment, which will remain a defining feature for the growth outlook in the coming years. Expansionary fiscal policies and rising wages should support domestic demand.

Euro area budget rules on spending must avoid the pro-cyclicality trap – voxeu
A real danger of faulty potential output estimates leading to procyclical policy.

Drivers of underlying inflation in the euro area over time: a Phillips curve perspective – ECB


UNITED STATES
  FEDERAL RESERVE
The Fed talks the talk, but in no rush to cut – Pictet
The Fed should remain on hold on 19 June, but Chairman Powell is likely to mention the possibility of cutting rates in the coming months, especially if trade tensions continue.

FOMC Preview: Paving the way for Fed cuts – ABN AMRO
Running out patience * From neutral to an easing bias * Declining inflation expectations * Dots to shift, but not aggressively

Two US rate cuts this year - we’ve changed our view – ING
Trade worries are not abating and the economy is starting to feel the strain. The Federal Reserve is preparing for a change of course and we now look for 50bp of rate cuts in 2H19

El-Erian: What the Fed Will Do This Week, and Why – BB
Having signaled that it will announce a rate cut, the central bank’s big questions are how much, when and why.

Brian Chappatta: Did the Markets Break Jerome Powell? We’re About to Find Out – BB
Bond traders have set themselves up for disappointment with aggressive bets on interest-rate cuts. Will the central bank dare to push back?

Fed to signal cuts are coming – ING
With trade tensions likely to escalate, this Wednesday’s Fed meeting looks set to confirm market expectations - precautionary interest rate cuts are coming


OTHER
Weekly Preview: Here Come The Central Banks – ZH

Bond markets are unconvinced how effective central bank tools are – FT
One troubling aspect of declining yields is falling inflation expectations

Banks are not intermediaries of loanable funds — facts, theory and evidence – BOE

Mary Meeker’s most important trends on the internet – vox
 
When Dead Companies Don’t Die – NYT
The policies created to pull the world out of recession are still in place, but now they are strangling the global economy.

  CHINA
China: Expect a long march – ING
We think the authorities will increase fiscal stimulus, as well as cut interest rates and the reserve requirement ratio (RRR) to support growth, in what is becoming a difficult environment for Chinese companies in the trade and technology sectors

Trade war: will US espionage fears scupper Chinese rail group? – FT
State-owned CRRC faces claims that its rail cars could be used for spying

Protesters flood Hong Kong to demand leader’s resignation – FT
Trump to raise territory’s demonstrations with Xi at G20

Hong Kong, Taiwan and hope for a better China – FT
There is no reason why an ethnic Chinese society cannot also be a democracy

  IRAN
Iran threatens to breach nuclear deal enrichment limits – FT
Tehran says threshold agreed on its uranium stockpile will be exceeded within 10 days

Trump’s ‘maximum pressure’ on Iran stokes war fears – FT
Administration increasingly divided over whether campaign will reduce tensions


REGULARS
Five Things to Start Your Day Asia – BB
Protest Momentum * Keeping Expectations Low * Energy Tensions * Forcing BOJ’s Hand? * Awaiting the Fed

Eco Day Asia – BB
Fischer Sees Powell's End, Fed to Push BOJ, U.S. Record * Ross downplays chances of major trade deal at Trump-Xi meeting * PBOC’s ‘tremendous room’ to act in focus as growth decelerates

Five Things to Start Your Day Europe – BB
2 million * ECB Debates * ‘Epic’ Crash * Iranian Tensions

EU Open Rundown – RANsquawk

FirstFT Daily Briefing – FT

Brussels Briefing – FT
Scenarios for the EU jobs summit: The European Parliament groups don’t seem ready to rally behind one candidate for the presidency

Brussels Edition – BB

Brussels Playbook – Politico
Romania’s Macron — Summit week — Salvini in Trumpland

Danske Daily – Danske Bank
Big central bank week takes off * Before that the ECB will take centre stage at the ECB Forum in Sintra

Eco Day Europe – BB
Draghi's Last Retreat, Peaked Rates, India Tariffs * ECB chief’s last summer get-together unlikely to be buoyant * Major central banks meet as global rates make about-turn

Daily Market Comment – Marc Chandler
Quiet Start to Big Week

Five Things to Start Your Day US – BB
Trade vs. central bankers * 2 million * Plane-a-palooza * Markets

US Open Rundown – RANsquawk

US Open – ZH
Slow Start As Traders Brace For Huge Week For Global Markets

Eco Day US – BB
Powell Bets, Recession Watch, Central Banks Take Stage * Powell’s concern over zero rates seen lowering bar for Fed cut * BOJ, Fed, BOE all meet in important week for central banks


FINNISH
Aamukatsaus – Nordea
Fedin poikkeuksellisen mielenkiintoinen kokous on vuorossa keskiviikkoiltana, markkinat odottavat keventävää linjaa | Myös useat muut keskuspankit kokoustavat tällä viikolla | USA:sta saatiin hyvät lukemat vähittäismyynnistä ja tehdasteollisuudesta