Setback to Turkish Recovery

Having appeared to have passed the worst of the economic crisis, Turkey has faced a fresh bout of turbulence in recent weeks. We have revisited our framework for identifying buying opportunities following an EM crisis to gauge Turkey’s position on the recovery path....

TLTROs are no Silver Bullet to Eurozone Problems

The ECB’s latest announced form of stimulus is a third round of TLTRO issuance. Previous tranches of TLTROs have been 4-year loans primarily made to European banks that are active in lending to the private sector. The rate paid on the loans is reduced as more of the...

Hints of Eurozone Reintegration

The reduction in cross-border financial asset holdings and regional trade across the eurozone are perhaps the most visible scars left from the global financial crisis and subsequent fallout in European sovereign debt markets. Under pressure from national regulators to...

Outsize demand for risky Italian bonds

Going by the strength of demand at recent Italian sovereign bond auctions, it would be easy to forget that the government was recently locked in an acrimonious dispute with Brussels over its budget deficit target for 2019. Now that the budget fiasco has died down,...

Eurozone deflation risk remains

Market momentum is building behind the global growth slowdown narrative, with last week’s downbeat European Commission forecast report triggering a safe-haven bid. The eurozone, in particular, is caught in the crosshairs with the German and Italian economies buckling...

Money markets show no faith in ECB to hike

This post was taken from our December 4th weekly report. While attention will inevitably be focused on the upcoming ECB monetary policy meeting in December and the expected end to asset purchases, money markets are increasingly pushing back against higher policy...

Markets Repricing for Eurozone Lowflation

Market-based measures of euro area inflation expectations have shifted lower, which could point to a delay in monetary policy normalisation. The first chart below shows the EUR 5Y5Y forward inflation swap, which has dropped sharply in recent weeks. A few years ago,...

Swedish Housing Market Starting to Crumble

We have previously flagged Swedish property as both a precariously overvalued asset and a risk to systemic stability given the high degree of household leverage. The scale and intensity of the Swedish property bubble is reflected in the two charts below. In real terms...

The Italian Doom Loop

With Rome appearing to square off with Brussels over its contentious budget, BTPs have faced considerable pressure and bank stocks have been hammered. This is the nefarious doom loop: Italian banks own a large chunk of Italian government debt and, given the lack of...