A spate of opinion polls showing a tilt toward Brexit, and the leading UK newspaper urging the Leave vote on the front page, keep the global capital markets on edge. Equities are lower, though of note ahead of the MSCI decision first thing Wednesday in Asia, Chinese shares eked out a small gain.
Core bond yields are 4-5 bp lower, which pushes the 10-year German bund yield into negative territory for the first time.
The risk that the UK votes to leave the EU next week is the dominant force in the capital markets. It is a continuation of what was seen at the end of last week. Sterling fell 1.4% against the US dollar before the weekend and is off another 1% today. A week ago, it traded as high as $1.4530. Now it is nearing $1.41.
A couple of weeks ago, the four central banks that meet in the coming days were thought to be a big deal. Numerous Federal Reserve officials were preparing the market for a summer hike. Risks of a new downturn in Japan spurred speculation that BOJ would ease policy.
On the other hand, the neither the Bank of England nor the Swiss National Bank were expected to move ahead of the UK referendum on June 23. Besides providing extra liquidity to the banks in the ahead of the vote, the BOE was understood as being in a reactive posture as was the SNB.
The US dollar traded heavily in the first few days of last week as investors continued to respond to the poor employment report. However, Yellen’s willingness to defer judgment while noting the underlying economic strength, JOLTS and the initial jobless claims, coupled with the ongoing anxiety over the June 23 UK referendum helped the dollar recover in the second half of the week.
If the Coalition loses this election there will be some insiders pointing fingers at the Business Council of Australia. There have been times in the last three years when the Coalition has held the line on policies that looked to experienced observers like political suicide. To understand the power behind the throne a good place to start is the advocacy of Australia’s most powerful business lobby.
Many people understand politics and economics to be two different disciplines. I remember in graduate school more than two decades ago, many colleagues and professors operationally defined political economy as how politics, by which they meant the state, screws up economics.
I spoke at the Fixed Income Leaders Summit earlier this week and teased that many seemed to think that politics comes from the ancient Greek “poly” meaning many and “tics” meaning bloodsucking parasites. It, of course, is not true.
At this point, there are few that contest that air pollution reduces the quality of life in urban centers and may be a major contributor to climate change. However, a recent study by the Organization for Economic Cooperation and Development (OECD) examined the economic consequences of air pollution and arrived at some disturbing findings.
The US dollar weakened in the first half of the week as participants continued to react to the shockingly poor jobs report and shift in Fed expectations. However, it recovered smartly yesterday and is seeing some modest follow through buying today.
Understanding how businesses engage in environmental management is important given growing global concerns about the depletion of natural resources and reductions in biodiversity. There has been a great deal of focus on large businesses, but small businesses have a role to play too. The fact that small businesses are neglecting this is of great concern.
Japan has the lowest percentage of women’s political representation in the industrialised world. Women hold only 12 percent of seats in the national legislative assembly, the Diet. This is compared to a 22 percent world average and a 19 percent average in Asia.
Japan’s ranking in the 2015 World Economic Forum Global Gender Gap Report at 101 out of 145 countries indicates some serious problems. Health and education are not problems for the women of Japan; it is economic and political empowerment where the stark inequality lies.
