Rates: Focus on ECB and Spanish ProblemsLars Tramberg Rasmussen, Senior Analyst, Danske BankIn the US and Germany 10Y bond yields have now corrected lower by 20-25bp from their peaks on the back of soft economic data, renewed uncertainty in Europe and month-end extension flows.However, the Spanish budget presented yesterday and the news overnight that the Greek coalition has struck a deal on its budget indicates that European politics are still moving forward in terms of fighting the debt crisis. This should reduce some of the uncertainty in the market, which has been supportive of fixed income in the past week.
Deleveraging DisparityJohn E. Silvia, Chief Economist, Wells FargoSince the beginnings of the 2001 economic recovery, there have been some interesting patterns of leverage and deleverage among the four major economic sectors. For households and nonfinancial corporations, the respective debt-to-GDP ratios rose with the recovery and then fell sharply with the latest recession. This cyclical pattern, however, is not characteristic of the government sector, which has risen sharply since the latest recession.
U.S. – The Long and Short Of It
Chris Jones, Economist, TD Bank Financial Group In our recent quarterly economic forecast, we detailed how the U.S. outlook could best be described as one of near-term weakness and long-term strength: weakness in the near-term from policy uncertainty, drought, and slowing global growth; strength in the long-term from improving household balance sheets and latent pent-up demand for household and business investment. Data released this week underscored this view.
Full StoryCompiled by David Song, Currency Analyst