EU Parliamentary elections in France.
In brown where Far-right Le Pen party has won yesterday. Source: Xavier Ruiz
Euro sinks on EU vote and French snap poll.
Common currency falls to lowest in a month. Hedge funds had recently turned net bullish on the Euro. Source: Bloomberg, HolgerZ
France’s bond yield hit the highest level this year on snap election.
10 year French bond yield climbs 11bps to 3.21%. Risk spread over Germany rose to 54bps, highest since January. Source: Bloomberg, HolgerZ
Austria’s hawkish central bank chief Robert Holzmann was the sole dissenter on ECB rate cut, BBG reports, citing a person familiar with the matter.
Source: HolgerZ, Bloomberg
As highlighted by Tavi Costa:
Despite quantitative tightening in most developed economies, their money supply continues to grow substantially, undermining their policies in a significant way. "Today's ECB decision to cut rates highlights how central banks are trapped and forced to reinstate financial repression even as inflation remains higher than historical norms. These policies act as a relief valve to alleviate financial stress, leading to a surge in prices of hard assets with limited supply". Source: Crescat Capital, Bloomberg
A hawkish cut? As expected, ECB cuts rates by 25bps despite higher inflation projections for 2024 and 2025.
Main rate now at 4.25%, Deposit rate now at 3.75. ECB not pre-committing to any particular rate path. ECB to follow data-dependent, meeting-by-meeting approach. The main surprise of the day is inflation forecasts being revised slightly upwards for 2024 (2.5% vs. 2.3%) and 2025 (2.2% vs. 2%), suggesting that the ECB will maintain a restrictive stance, keeping key rates above the neutral rate for the next 12 to 18 months. Bond yields have slightly increased across maturities without significant weakness in peripheral rates. The market is now pricing in fewer than two rate cuts for the remainder of the year, aligning with expectations of one rate cut per quarter. Source: Bloomberg, HolgerZ
Productivity shortfall against the US is one thing, but Germany falling behind France is remarkable. What happened?
Source: Bloomberg, Michel A.Arouet
Germany has the shortest average working hours of any advanced economy, with the annual figure falling 30% in the past 50 years and now a quarter below US levels, per FT.
Source: unusual_whales, FT
