29th June 2018
One week after Italy’s disruptive reminder that capital markets are still quite sensitive to the wrong sort of news, equity and bond markets returned to much quieter waters. Italian bond yields remain more elevated compared to other Eurozone countries than they have for a long time and this might not change for a while.
Precarious balancing act: Brexit, the BoE and Housing
Tension on the Brexit front this week. On Thursday, Theresa May faced off with Brexit secretary David Davis over her EU “backstop” proposal, which was published after their talks. If no trade deal is agreed, then in order to avoid a hard border between the two Irelands the UK will have to match the union’s trade tariffs.
The Great Attractor: How capital flows are boosting the US economy
As we have written in these pages over the past few weeks and months, the US economy has been in rude health lately. Whereas 2017 saw Europe and Japan picking up momentum, this year the US has firmly taken the reins and is now powering global growth.
China’s structural modernisation via removal of credit ‘subsidies’
Last week, we discussed how China’s deliberate and aggressive deleveraging of its $10 trillion shadow banking sector has reduced monetary liquidity in China’s capital market and led to a rise in corporate defaults.
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