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23/02/2017

Weekly News Bites: Macron and the big cheese

Our top picks from this week's Morning Chat

Macron and the big cheese: Ten-year US government bond yields dropped to 2.41% as the latest Federal Reserve minutes show uncertainty on taxes, trade and fiscal spending. Separately, worries that France would careen sharply in a new direction under a Le Pen presidency abated somewhat as Francois Bayrou, a veteran centrist politician, threw his considerable political weight behind 39-year old sensation Emmanuel Macron. The French 10-year government bond yield fell below 1%. Even in the days of global reflation, bonds are far from a one-way street. (23/02)

Worth writing home about: Sales of previously owned US homes climbed to 3.3% in January from December, the fastest pace in ten years. The increase in demand – which is underpinned by a buoyed labour market and still low interest rates – also led to a sharp 7.1% annual rise in prices to $228,900 (median). However, the supply side of the equation may be more important. Housing inventory was down for the 20th month on the trot, with new supply curtailed by shortages of land and labour. (23/02)

Honesty is the best monetary policy: Senior members of the Bank of England were under fire yesterday for the inaccuracy of past economic forecasts; the Bank missed the coming financial crisis in 2008, and was too dire in its post-Brexit scenario. In a mea culpa, the Bank’s Chief Economist admitted the dangerous rise of borrowing was overlooked pre-crisis, but that subsequent models have corrected for it. Nonetheless, another BoE member, Gertjan Vlieghe, was more circumspect, saying the Bank will miss the next crisis, and he is simply “never confident in any forecast”. (22/02)

This fly is open: Heathrow – with its two runways stretched to the very edge of capacity – retained its place at Europe's busiest travel hub in 2016 with 76 million passengers. The meagre 1% growth was entirely a result of larger planes, with nine airlines now flying the A380 superjumbo into the airport. While the government has backed a highly contentious third runway, it won't be operational until 2026. This allows a plenty of time for others – such as Amsterdam’s Schiphol Airport – to fill the gap. It is now the third-busiest European hub with 64 million passengers, a huge 9% increase versus 2015. (21/02)

Sam singing: Shares in Samsung Electronics ended up over 2% today in spite of the company's boss, Lee Jae-yong, bring arrested last week in a corruption case which continues to rock the country's establishment. The case has previously led to the impeachment of President Park Geun-hye. All of this stems from tens of millions of dollars in payments made to Choi Soon-Sil, one of Ms. Geun-hye's best friends. Nonetheless, Samsung shares are up 7% in 2017, and over 60% over a year. (20/02)

 

 

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