Oct 19, 2018 | European Economy, UK
The politics of Brexit have enveloped the UK, and have negatively affected UK growth. However, as recent current-account data shows, things are less bad than originally feared. The top-left chart shows that net investment into the UK has continued to rise. The total...
Oct 5, 2018 | European Economy
We have previously argued that the Swiss National Bank has become slightly more tolerant of modest currency strength, given that the sheer scale of previous FX intervention has dented the central bank’s appetite for further balance sheet expansion. The top-left chart,...
Sep 9, 2018 | European Economy
While the Swiss banking sector has deleveraged over the past decade, the household sector exploited record low interest rates and strong income growth to take on more debt and fund acquisitions in the booming property market. Relative to GDP, household debt is now the...
Jun 21, 2018 | European Economy
While we don’t want to get drawn into the Byzantine world of Italian politics, we do have a thing or two to say about bond markets. What has struck us the most about the Italian bond market has been the degree of volatility in BTPs and drop in liquidity. The first...
Jun 1, 2018 | European Economy
On the back of signs that Germany and the eurozone are slowing, we highlight the risk of a drawdown in Polish economic growth. Although Poland is ostensibly a domestic demand-driven economy, it is still highly trade dependent (exports + imports are above 100% of GDP)...
May 3, 2018 | European Economy
Since we highlighted the potential of CE3 markets in July 2017 in light of the global reflation trend, our preferred trade – short EURCZK – has made a modest 2.8%. Even after this relatively anaemic rally, we believe that the koruna will now take a breather. As a...
Jan 19, 2018 | European Economy
Sentiment in Europe has soared to its highest level since 2001. However, in Europe as elsewhere, such lofty sentiment should be taken as a warning for markets, not a green light. As we can see from the top-left chart, previous peaks in economic sentiment have...
Jan 11, 2018 | Emerging Markets, European Economy
On a structural basis, Turkey has consistently been one of the most vulnerable economies to a currency crisis in light of considerable external vulnerabilities, and was flagged again in VP’s September thematic update of our debt and currency crisis framework. However,...
Dec 14, 2017 | European Economy, US Economy
Real rate differentials continue to suggest EURUSD has more downside. We have two ways of looking at real rate differentials. The top left chart shows the 2 year rate differentials deflated using CPI. The top right chart takes the same data but also divides the real...
