The 3% of GDP limit: how accurate?
Being far from the 3% of GDP deficit target doesn’t prevent France from borrowing at low cost.But increases the debt ratio
Temporary slowdown
Activity remains very volatile. After dropping in the first quarter, markedly rebounding in the second, GDP growth is set once more to slow down in the third quarter. The main source of weakness is private consumption, as income stalled, taxes went up and Americans still are willing to repair their balance sheet. The recent weakness seems temporary, but since it happens at the beginning of the quarter, it will result in a limited growth rate. For 2014 as a whole, it looks now rather impossible to match the 2013 performance.
Back to work on fiscal policy
A very fragile economic outlook has rekindled debate over the need for fiscal stimulus in the Eurozone. The President of the ECB, Mario Draghi, argued for a more accommodative policy mix as well as greater coordination of national policies. On the whole, fiscal policies are likely to remain moderately restrictive next year. Countries will apparently take advantage of the existing margins of flexibility. The launch of a European investment programme is welcome news, but definitely not a game-changer.
A “No” vote is better than a Disunited Kingdom
In a referendum on 18 September 2014, the Scots will declare their position on independence, or their continued membership of the United Kingdom. Unionists and nationalists are neck and neck in the polls. Although we expect the no side to win, the scenario of a vote for independence has become sufficiently credible for us to explore its consequences. Apart from the choice of currency, other questions include the division of closely intertwined debts and assets, Scotland’s future position within Europe, or even the eurozone, and the sharing of oil revenues.
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EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.