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EUROPE
"The EU's greatest
achievement is the Euro", said Michael Portillo on the BBC's This Week
programme last Thursday. No, Michael, it isn't. It is the EU's worst mistake.
BREXIT
Brexit and sterling:
Movements of between 5% and 15% seem plausible – voxeu
Brexit Monitor No. 7:
Less than two weeks to go – Danske Bank
Will Brexit Hurt the
Euro? The Market Seems to Think Not – WSJ
David Cameron: ‘I’ll
pull UK out of the single market after Brexit’ – Politico
Ambrose Evans-Pritchard:
Why I am voting to leave the EU – The Telegraph
Paul Krugman: Notes on
Brexit – NYT
Saxo on Brexit: Britain
enters the final lap – TF
Leave opens up gap on
Remain in Brexit poll – Politico
European leaders hammer
post-Brexit uncertainty – Open
Europe
EUROPEAN
CENTRAL BANK
The ECB now faces a
fundamental contradiction in its mandate between the Lisbon Treaty’s Article
127 (price stability, plus the ECB target of under but close to 2% inflation)
and Article 123 (no overt monetary finance of governments). This article
discusses three options – two ways in which the fiscal rules could be improved;
and the temporary abeyance of Article 123, making it ‘state-dependent’. It also
explains why recent arguments against the effectiveness of ‘helicopter money’
are mistaken.
On 24 June the ECB will
announce the take up in its most recent policy measure, TLTRO II. While there
is ample liquidity in the Eurosystem, the Targeted Longer-Term Refinancing
Operations (TLTROs) will attempt to revive growth by offering very cheap
funding for banks to lend on to the real economy. We estimate the total take up
over the four operations will be around EUR 650bn, while the June TLTRO take up
will be around EUR 400-500bn. Therefore, a respectable weapon but not a game
changer.
Euro Corporate Watch – ECB gets off to a flying
start – Pictet
The ECB exceeded market
expectations with EUR 348mn of CSPP purchases on the first day * Clearly Draghi
didn’t want to disappoint the market *Extrapolating the numbers means that the
ECB hints at a EUR 7bn of purchases per month * This is consistent with our
base case of EUR 7.5bn per month
€348 Million: ECB Releases First Total Of
Corporate Bond Purchases –
ZH
UNITED STATES
FEDERAL
RESERVE
Looking ahead to the Fed:
Assessing financial market set-up – voxeu
Tim Duy: Five Questions
for Janet Yellen – BB
Newest Inflation
Expectations Likely to Trouble the Fed – WSJ
Kocherlakota: The Fed
Must Attack Low Inflation – View / BB
It’s a Good Thing the Fed Has Missed its Chance to Raise Rates – WSJ
FOMC Preview and Review
of Projections – Bill McBride
Paul Krugman: Don’t Take
A Hike – NYT
Janet Yellen's Inflation
Problem – Tim
Duy
FOMC preview: Fed likely
to adopt a 'wait and see' approach – Danske
Bank
OTHER
Growth and Brexit
worries have depressed yields and Fed expectations lately, and if these subside
then a Fed hike could soon be back on track - maybe already in July. The
empirical track record of recent summers(!) does however provide cause for
concern. Five out of the six past summers, something has hit the proverbial
fan. If not a Brexit, could it be China's FX policies, or could BOJ push the
panic button?
We find that a real
appreciation (depreciation) reduces (raises) significantly annual real GDP
growth, more than in
previous estimates in the literature. However, our results
confirm this effect only
for developing countries and for pegs.
We find that macro and
default-specific world factors are a primary source of default clustering
across countries. Defaults cluster more than what shared exposures to macro
factors imply, indicating that other factors also play a significant role. For
all firms, deviations of systematic default risk from macro fundamentals are
correlated with net tightening bank lending standards,
suggesting that bank
credit supply and systematic default risk are inversely related.
Macro Digest: Risk sentiment takes a dive as
Brexit fears mount – TF
The collective
apprehension surrounding the June 23 Brexit vote has sippled over into risk
sentiment in an overall sense creating a slew of interesting circumstances
ahead of the vote.
OFF-TOPIC
It’s not that different
from running any other business.
A new study supports
what a small group of military researchers has suspected for decades: that
modern warfare destroys the brain.
REGULARS
Danske Daily – Danske
Bank
Euro rates update – Nordea
Eye-Opener – Nordea
Brexit concerns spur safe have
demand; JPY stronger; Brent oil below USD 50 * Central banks and Brexit polls
to dominate this week * US 10Y yields lowest since May 2013 * EUR/JPY at new
three-year low
Morning Markets – TF
As the Brexit referendum on June 23
draws ever closer investors and markets appear less and less certain that
things will continue as they have been.
Euro wrap-up – Daiwa
http://www.uk.daiwacm.com/research-zone/research-reports
Daily Market Comment –
Marc
Chandler
Brexit Dominates
Daily Market Comment –
Macro
Man
A Brexit thought experiment
Daily Shot – TF
Daily Press Summary – Open
Europe
Labour to take on bigger
role in Remain campaign amid concerns over swing to Leave * Schäuble warns that
UK will not have access to Single Market post-Brexit vote as Tusk warns new
deal could take up to seven years to negotiate * Leaked documents suggest UK
diplomats discussed granting visa-free travel to up to 1.5m Turkish citizens * James
Dyson: Claims that no one would trade with UK after Brexit are “absolute
cobblers” * Pound weakens as polls tighten with ten days until EU referendum * Irish
PM raises concerns over EU investment rules * EU Commission President and Dutch
PM call for swifter deepening of single market * Turkey has no chance of
joining EU under Erdogan German Greens leader says * German Vice Chancellor
compares AfD to Nazis * Baltic States and Poland considering building air
defence system to counter Russian aggression * Finnish Finance Minister set to
quit post after losing party leadership election
Brussels Playbook – Politico
Horror in Orlando —
Parliament debates weapons ban
US Open – ZH
Global Stocks Plunge; US Futures,
Oil Slide As Brexit Fears "Jolt Markets"
Frontrunning – ZH
Fresh polls on Friday
showing once again point to higher odds of a Brexit than the market is prepared
for sending sterling into a tailspin and impacting the euro and all risky
assets globally as correlations head to one.
Global markets are
engulfed in a sea of fear this Monday morning as the heightened risk of a
Brexit hammers equities (particularly banks and miners) exerts pressure on
sterling crosses and triggers a flight to the usual safe havens of bonds gold
and the Japanese yen.
FINNISH
Fed
tarkkailee tämän(kin) kesän * USA:sta vähittäismyyntiluvut ennen Fedin kokousta
* Brexit painaa Britannian työmarkkinalukuja * Venäjän keskuspankki leikkasi
korkoja
Elämäsi pankin ohjauksessa – Jouko Marttila