The surge in Euro area inflation—with headline expected to reach 9% in September—has raised the prospect of second-round effects, where increases in wage growth and long-run inflation expectations push up inflation persistently. We explore the risk of such effects by taking a historical look at the effects of oil price… Read More »
Divide and rule policy (Latin: divide et impera), or divide and conquer, in politics and sociology is gaining and maintaining power by breaking up larger concentrations of power into pieces that individually have less power than the one implementing the strategy. Historically, this strategy was used in many different ways… Read More »
ECB officials have signalled the possibility of a new backstop tool for sovereign debt markets. We think their main objective is to deter a speculative run that could interfere with plans to hike policy rates. But officials have remained deliberately vague regarding the triggers and features of a potential backstop,… Read More »
Emmanuel Macron’s election victory on 24 April supports policy continuity for France (AA, stable) and for European integration, but popular support for his reform agenda is considerably weakened compared to five years ago. Growing popular dissatisfaction with the political status quo is reflected in the highest abstention rate in over… Read More »
– S&P Global Ratings raised its Henry Hub and AECO natural gas price assumptions for the remainder of 2022 and 2023. We raised our Title Transfer Facility (TTF) price assumptions for 2023 and our 2024 long term price assumption. We also raised our Brent and West Texas Intermediate (WTI) oil… Read More »
• We don’t see a wage-price spiral. Companies are actually paying less in labor per unit of output, we find. We think wages can rise more without adding to inflation. • The S&P 500 plunged to new 2022 lows last week. We remain overweight equities in the inflationary backdrop but… Read More »
The decision by Gazprom to halt gas supplies to Poland (A+/Negative) and Bulgaria (BBB+/Stable) after both countries refused to use Russia’s proposed mechanism for gas payments is a significant escalation in the energy stand-off between Russia and the EU. The move also substantially increases risk of further gas-supply disruptions to other EU countries if… Read More »
Most of the CEE currencies that we cover ended 2021 with small losses against the euro, with the Czech koruna the only one bucking this trend, rallying by approximately 5%. The contrasting currency performances can, in our view, be largely attributed to differences in macroeconomic fundamentals, monetary policy, and risk… Read More »
Profit before tax up 4% to € 1.7 billion with net profit up 18% to € 1.2 billion Post-tax return on tangible equity (RoTE)1 of 8.1% Cost/income ratio of 73%, down from 77% in prior year quarter Profit grew despite 28% increase in bank levies to € 730 million Core… Read More »
1. Growth across the Euro area has so far held up better than expected since the onset of the war in Ukraine. The flash PMIs surprised notably to the upside in April, with the composite index moving up to a 7-month high. While manufacturing momentum moderated—driven by Germany—growth in services… Read More »
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