Money‚ Markets & Macroeconomics

China bond intervention is only a short-term fix

2 Jul 2024

The central bank’s decision to trade government debt may deter buyers for now and push up yields. But an economic recovery needs more than market tweaks. If this month’s Third Plenum offers few supportive policies, safe haven-seeking investors will pile back into bonds.

Ukraine bondholders’ haircut is a necessary evil

1 Jul 2024

The stricken country wants holders of $20 bln of private sector debt to take a big hit. In ordinary times, Kyiv’s request would be galling. Yet paying foreign fund managers may annoy Kyiv’s public sector backers. And the stigma of default matters less in wartime.

The risk of a euro crisis is rising

1 Jul 2024

While political instability in France adds to the single currency’s fragility, it probably won’t trigger another meltdown. But euro zone members’ high debts, pressing spending needs and low growth at a time of rising nationalism and geopolitical conflict are storing up trouble.

Far-right win leaves France amid shock and chaos

30 Jun 2024

Marine Le Pen’s party received 34% of the votes in French parliamentary elections, according to exit polls, and could win a majority of seats in the second round. If it doesn’t, the ensuing stalemate might be preferable to a government playing fast and loose with the economy.

France raises ghosts of last euro zone crisis

27 Jun 2024

French voters will go to the polls this weekend for the first round of the parliamentary elections. In this Viewsroom podcast, Breakingviews columnists discuss why the country’s rising bond yields and the risks of contagion will be uncomfortably familiar for investors.

French left is too divided to soak the rich

27 Jun 2024

France’s leftist parties have vowed to lift wages and control prices if they win the upcoming election. That would cost 150 bln euros and be funded by higher taxes on the wealthy. Yet fierce splits between moderate socialists and hardliners mean the well-to-do can rest easy.

Bond traders’ rate-cut party is yet to get going

26 Jun 2024

Central banks from Ottawa to Frankfurt are reducing rates. Bond prices should be rallying, but an index of euro zone debt is up just 0.1% since the ECB eased borrowing costs this month. While French elections are one reason why, tight US monetary policy is the key constraint.

Why the French vote also matters to Italy

25 Jun 2024

The outcome of snap elections in France will reverberate beyond its borders. Debt-laden Italy is particularly exposed if borrowing costs rise. In this Exchange podcast, former top Treasury official Fabrizio Pagani discusses Rome’s fiscal challenges in a changing EU landscape.

UK investment crisis calls for taxes and U-turns

25 Jun 2024

Budget strictures could see public expenditure sink from 2.4% of national income now to 1.8% by 2029. Businesses are unlikely to pick up the tab. The winner of Britain’s July 4 election can redress domestic underinvestment by taxing more – and moving the fiscal goalposts.

Red Sea gives shipping an Uber-style price surge

24 Jun 2024

Container rates have spiked well above their level when Houthi attacks first shut the Suez Canal. Surging demand as exporters seek to get ahead of looming trade tariffs is one reason why. But that in turn would be easier to manage if traffic didn’t have to go round Africa.

How to scale up the G7’s $50 bln Ukraine loan

23 Jun 2024

The club of rich democracies navigated many obstacles to lend to Kyiv. They found ways that could side-step U.S. Congressional approval and avoid increasing EU countries’ debts. They could use similar methods if they are prepared to give Ukraine the $320 billion it really needs.

A warning from history about large-cap stock booms

21 Jun 2024

Five decades ago, shares in a handful of large companies like IBM and McDonald’s propelled the US stock market to new highs before collapsing. As investors pile into tech giants led by $3.3 trln Nvidia, the earlier period may be instructive for those who believe history rhymes.

French plutocrats may regret keeping mum on Le Pen

20 Jun 2024

The country’s corporate chiefs have refrained from criticising the far right’s plans ahead of the election. That’s a change from 2017 and 2022 when Marine Le Pen ran for president against Emmanuel Macron. Considering her economic platform, they may rue their embarrassed silence.

French cracks show up Italy’s messy fiscal house

19 Jun 2024

Investors fear Paris’s financial laxity. Yet, after wasting $235 bln on tax credits for home improvements, Rome’s finances are also shaky. EU funds will help offset the phasing out of incentives. But with weak growth and nervy markets, cutting debt is both harder and more needed.

France would feel lonely if debt crisis hit

18 Jun 2024

Market fears of a far-right victory in the elections sent yields on the country’s 2.3 trln euro debt to 12-year highs. If traders’ worries deepen, support from the European Central Bank is not a given. And a eurosceptic government would be deprived of Brussels’ goodwill.

China’s risky answer to wall of debt is more debt

18 Jun 2024

The central government is issuing special ultra-long bonds to steer the $18 trln economy towards ‘high quality growth’. In piling risk onto the country’s last decent balance sheet, President Xi Jinping is betting the People’s Republic can continue to defy a debt crisis.

The Group of Seven is bruised but much needed

17 Jun 2024

The club of large, rich nations has struggled with wars in Gaza and Ukraine. Most of its leaders are lame ducks. If Donald Trump becomes US president and Marine Le Pen leads France, they could paralyse it. Co-ordinating advanced democracies is more necessary and harder than ever.

Net zero arbitrage is large, but no one-way bet

14 Jun 2024

There’s a big gap between the rich world’s ambitions to reduce carbon emissions and the ability of governments to achieve that goal. Investors can try to exploit that disconnect. However, economic, technological and geopolitical constraints can quickly change in unexpected ways.

Europe’s election eruption threatens paralysis

13 Jun 2024

Centrist and green parties saw big losses in a vote to elect the European Union’s parliament, sparking a shock snap election in France. In this Viewsroom podcast, Breakingviews columnists explain how ensuing instability could slow the continent’s response to urgent global issues.

French investors face full year of financial funk

13 Jun 2024

If Marine Le Pen’s far-right RN party wins next month’s election and sticks to its pledges, France’s 5% budget deficit will balloon. President Emmanuel Macron could call a new election, but not for 12 months. Amid paralysis or worse, the state’s fiscal position may get messier.