ECB's Comprehensive Assessment (updated)
W/E: Weekly Support (updated)
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EUROPE
EU
Commission must decide by Wednesday whether French and Italian budgets are in
“particularly serious non-compliance”.
The Resistible
Return of Nicolas Sarkozy – Project
Syndicate
While only
20% of the French electorate view President François Hollande favorably, and
nearly two-thirds do not wish to see Nicolas Sarkozy return, more than
two-thirds hope that former Prime Minister Alain Juppé will. That makes the
69-year-old Juppé the most popular political figure in France.
Paris to cut an additional €3.6bn in effort to avoid budget fight
Renzi
under fire – FT
Gideon
Rachman: Nobody ever said that reforming Italy would be easy. But Matteo Renzi,
the Italian prime minister, is going through a series of brutal tests this
month – as he fights on two fronts, in Brussels and in Rome.
Everything
that’s wrong with France is worse here
Departing
Barroso sees EU stronger after euro debt crisis – Reuters
None of the
tools currently on the table will get the job done
GERMANY
I think the
current Eurozone problem makes much more sense if we focus less on divergent
national interests, and more on different macroeconomic points of view. The
German perspective which sees the Eurozone problem in terms of profligate
governments and lack of ‘structural reforms’ outside Germany is utterly
inappropriate in understanding the Eurozone’s current position. Yet it is a
point of view that too many outside Germany also share.
Despite
Good News From ECB Tests, German Banks Still Face Challenges – WSJ
German
banks face challenges despite receiving a clean bill of health from the ECB’s
review of bank assets, in particular through risks stemming from super-low
interest rates in Europe, a top official from Germany’s central bank said Sunday.
SWEDEN
An
appetizer ahead of Riksbank’s rate decision – Nordea
The
Riksbank’s Executive Board meets Monday 27 October at 09.00. The chart below,
with a scenario with unchanged fuel prices as from last week, gives a hint on
the near term inflation outlook that will be discussed at the Riksbank’s
meeting. This is the main reason to why we expect a very soft Riksbank.
Riksbanker
Who Left in Protest Says Untried Steps Only Hope – BB
Lars E. O.
Svensson -- a man who has devoted his career to understanding inflation and who
last year left the Riksbank’s board in protest -- says interest rate cuts alone
may not be enough to save Sweden from deflation.
EUROPEAN CENTRAL BANK
Draghi
Sets Stimulus Pace as ECB Reveals Covered-Bond Purchases – BB
At 3:30
p.m. in Frankfurt, the ECB will reveal how much it spent on covered bonds last
week after returning to that market for a third time as part of a renewed bid
to stave off deflation.
Size
Matters to Traders Awaiting ECB Lowdown: Chart of the Day – BB
The chart
of the day shows the ECB’s two previous rounds of covered-bond buying started
slowly and gradually increased in size.
ECB
Bought Just EUR1.7 Billion Covered-Bonds Last Week – ZH
Stocks
Spike On Reuters' "ECB Does QE" Leak Du Jour – ZH
MACRO NUMBERS
German Ifo
Business Climate Index Continues to Fall – CESifo
Germany:
Close to recession – Nordea
German IFO
declines yet again in October – TradingFloor
German Ifo
Business Confidence Drops for Sixth Month – BB
Monetary
developments in the euro area (Sep 2014) – ECB
Still
positive signs from bank lending and money supply – Danske
Bank
ECB money
supply accelerates for fifth straight month in September – TradingFloor
UNITED STATES
FEDERAL RESERVE
FOMC:
End of QE3, Shorter Statement – Calculated
Risk
US: Fed
to end QE – FOMC preview – Nordea
Despite the
recent market turmoil, we expect the Fed to end its QE programme at this week’s
FOMC meeting, which concludes on Wednesday. However, we expect the Fed to make
it clear that there are no plans for tightening yet. A more direct
acknowledgement of downside risks posed by global factors is likely. Treasuries
look set to record modest gains after the Fed’s statement, while the curve
could flatten a bit. Dollar bulls should not worry much either.
Fedspeak
Cheatsheet: What Are Fed Policy Makers Saying? – WSJ
What Fed
officials have said about the outlook for the economy and monetary policy since
their meeting September 16-17.
Worried
on low inflation, Fed seen offering soothing words – Reuters
The U.S.
Federal Reserve this week will likely reinforce its stated willingness to wait
a long while before hiking interest rates after a volatile month in financial
markets that saw some measures of inflation expectations drop worryingly low.
US
Federal Reserve set to halt asset purchases – FT
The end of
US Federal Reserve asset purchases this week marks the climax of an
unprecedented monetary campaign, but there is no room for a triumphant declaration
of victory.
The
largest economic experiment in history is ending – Finansakrobat
Fed
Touchy About Touching Rate Guidance – WSJ
Fed policy
makers meeting Tuesday and Wednesday are likely to debate whether to keep the
language in their previous policy statements pledging to keep their benchmark
rate near zero for a “considerable time” after their bond-buying program ends.
MACRO NUMBERS
Markit
Flash US Services PMI – Markit
U.S.
services sector activity growth slows in October: Markit – Reuters
Service PMI
Slides To 6 Month Low, Implies Slide In Q3 GDP To 2.5% – ZH
U.S.
pending home sales gain misses expectations in September – Reuters
OTHER
Daily
Macro – WSJ
Germany’s Ifo index of business sentiment
showed that the country’s industrial leaders are feeling gloomy, but what could
we expect from a survey taken this month…welcome results of the European Bank
Authority’s stress tests, released on Sunday. They proved to be tough enough to
be credible but not too alarming to cause any sort of systemic distress….The
only thing they have to worry about is the Federal Reserve’s policy meeting,
the results of which will be out on Wednesday.
Daily
Central Banks – WSJ
Hilsenrath’s
Take: European Banks Pass Test, But Are They Ready to Lend? * ECB Says Most of
Europe’s Banks are Healthy * Fedspeak Cheatsheet: What Are Fed Policy Makers
Saying? * Janet Yellen’s August: Lots of Meetings — And Vacation * BOJ Likely
to Stick to Bullish Inflation View Despite Cutting Growth Forecast
FI
Eye-Opener: No time to linger on the stress test results – Nordea
Bond yields
with marginal fall on Friday – intra-Euro-area spreads widen. Some relief today
after ECB stress tests: higher core yields, Spain to perform vs Italy, France
vs Belgium. Stress tests behind – not the stress. A far-left regional
government to cause worries in Germany? ECB’s covered bond purchase
announcement not that exciting. An interesting week ahead: Fed, US GDP,
Euro-area inflation. German, Italian and US supply – coupon and redemptions
boosting Spain and Italy.
The
distributional effect of quantitative easing – Bruegel
The notion
that ultralow interest rates and central-bank asset purchases have fueled a
surge in asset prices, which mostly benefits the wealthy, has become quite
prevalent. While the question of the redistributive impact of monetary policy
is not new, it has taken on a whole new dimension with the renewed interest in
inequality and the unprecedented scale of unconventional monetary policies.
WEEKLIES
FX:
deleveraging over?
– Nordea
With the
European bank stress test results out, the banks, if anything, have one minor
reason less not to increase lending. End of deleveraging is good news for the
euro area economy, but... EUR?
Strategy
Sweden: On the radar
– Nordea
Riksbank:
time to re-gain credibility and control * Riksbank: survey points to 15-20bps
cut * SEK rates: Sweden most out of sync with the economy * Sweden macro:
skewed probability distribution for government´s debt * EUR rates & FX: QE
– perspectives on what´s priced in * AQR & stress tests: the golden mean
FINNISH
EKP, Saksa ja Suomi joustavat – Henri
Myllyniemi / US
Eurouskovien saarnat eivät muutu – Reijo
Paunonen / US
Stressitestit tuoneet esiin ilmoittamattomat riskiluotot
– Sirba
Abdallah / US
Barroson ex-neuvonantaja: pankkitesti käsien pesua – PS
Systeemiriski pankkiriskiä suurempi – Elina
Lepomäki / US
Sveitsiläisestä velkajarrusta – Akateeminen talousblogi
Kuluttajien luottamus ennallaan lokakuussa – Tilastokeskus
EK:n luottamusindikaattorit eivät vielä povaa parempaa – YLE
Ehditkö jo iloita luottamuksen noususta? "Ei käännettä
parempaan" – TalSa
Consumer
confidence marginally up, but remains very weak – Handelsbanken