The broad economic conditions have been shaped to a large extent by the different policy responses to the Great Financial Crisis. For reasons that need not concern us here, the US and UK policy response was relatively stronger than the eurozone and Japan’s response. This, in turn, has produced a de-synchronized growth cycle.
Over 5 million people between 15 and 25 years of age are unemployed in the European Union, and youth unemployment trends are worsening in many parts of the eurozone. That joblessness amounts to around $150 billion annually in lost wages and spending as young Europeans remain unable to purchase basic services and goods such as food, housing, and health care.
A quarter of young Europeans cannot find a job, according to a European Commission study on youth unemployment. That number is twice as high in Greece and Spain, where youth unemployment has surpassed 60% in some areas.
In the second quarter of this year, Turkey’s economy has grown a smaller amount than had been expected, sending the value of the Lira to its lowest estimation in over five months. The finance minister has released a warning suggesting that the estimated growth of 4% could be missed this year.
1) USD/HKD traded at its highest level since May 2012.
2) Russian officials confirm that capital controls are not on the cards.
3) The Turkish central bank started to push bank against currency weakness – albeit slightly.
4) Dilma’s chances of re-elections increased further.
5) Argentine central bank Governor Fabrega resigned.
6) Uruguay has cut the reserve requirement on government bonds to zero, and on central bank bond purchases to 30%.
This seems to be the first time in several months that ECB President Draghi has been rather anti-climactic. The disappointment or the “sell the rumor buy the fact” scenario we suggested is, in fact, unfolding, and the euro is correcting higher.
With more than half of the global population now living in urban areas, some in abject poverty, the path to sustainable development must pass through cities. In a meeting in July, the Working Group for the UN’s Sustainable Development Goals set a target to build ‘inclusive, safe resilient and sustainable’ cities and human settlements.
Both manufacturing and construction in the U.S. saw anemic growth in September, counter to expectations for a steadily improving American economy.
The Institute for Supply Management released its September 2014 PMI, which fell 3.4 points to 56.6% from the prior month. This is the second consecutive month of steep declines in the ISM index, indicating that demand for manufactured goods in the U.S. and abroad is weakening.
The economic growth that Malaysia has experienced throughout the first half of this year has been announced as one of the best and most impressive in the world. The second finance minister said that Malaysia has begun to register a particularly strong growth of 6.4% throughout the second quarter.
The ECB meeting and details about the asset purchase plan is the key event of the day. However, there is something else happening. A string of disappointing US data and the sell-off in equities have sparked a bond market rally that again has caught many participants wrong-footed.
The US 10-year yield had reached 2.62% on September 19. It fell back to 2.38% yesterday and is only a little above that now. It is not just the long-end. The 2-year yield was near 60 bp two days ago and is now flirting with 50 bp.
The European Central Bank meets tomorrow. The focus is on the details of the asset-backed securities and covered bond plan that was announced last month.
There are three key issues related to this new initiative: What instruments will be purchased, how much will be bought, and how long will the purchase program last?
