According to the Eurostat, Euro area annual inflation rose to 1.8 % in January. The most important thing is that Italy’s inflation revised up to 1% in January of 2017- it’s the highest inflation rate since August of 2013.
In January 2017, the lowest annual rates were registered in Ireland (0.2%), Romania (0.3%) and Bulgaria (0.4%). The highest annual rates were recorded in Belgium (3.1%), Latvia and Spain (both 2.9%), and Estonia (2.8%).
Potential of a Greece default- An Italian bail out – Alarm from Spain and Portugal
German bond market yields fell as rising predictions of Le pen victory. The European Central Bank’s bond-buying speculation led to a two-year German bond yields down. Therefore, two-year German bond yields reached at new low. In addition to the strength in German bonds, German 5Y Credit Default Swap (CDS) spreads are narrowing while Portugal, Italy and France 10Y spreads are widening over Germany. In other words, their borrowing costs are rising versus Germany.
The euro break-up risk led the french yields to set for biggest weekly fall in 7 months. You can see the chart below that there is some panic between the bond investors as Le Pen, who has plan to break-up the euro, narrows gap.
A very interesting chart from @joshdigga !
It seems that Fillon’s presidential election odd leads to increase the 10Y spread much more than the Le Pen’s.
The euro remained under pressure this week as rising euro break-up risk and French political election uncertainty. Political uncertainty in EU and US impact the prices and dollar fell on US policy doubts this week.
Britain’s economy grew 0.7 % in the fourth quarter of 2016.
Britain’s economy grew 0.7 % in the fourth quarter of 2016 because of the sharp depreciation of the pound which leads to import more expensive in the UK, but business investment (firms’ demand for capital) in the UK decreased by 1% in Q4 2016.
How the FTSE and pound have changed since Brexit…
That view was echoed by Howard Archer, an economist at IHS Global Insight.
You can see from the graph above that the value of pound fell sharply against the dollar after Brexit.
Chart of the week!
The US is still the world’s biggest economy..
The four biggest economies in South America (Brazil, Argentina, Venezuela and Colombia) produce only about 4% of global GDP, while Africa’s three biggest economies (South Africa, Egypt and Nigeria) produce no more than 1.5%.
China produces about 14,84 of global GDP, while Germany, France, Spain, Italy and United Kingdom all produce 15,73 of global GDP.
Gold reacted negatively to interest rate hikes, so gold prices rose this week after Fed minutes suggested interest rate hike later.
Concerns over rise in US crude supply !
Oil prices were down after US crude inventories rose for a 7th week..
Useful article here:
With shale oil production like this, who needs Trump?