http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/http://www.fxstreet.com/fundamental/http://mediaserver.fxstreet.com/images/fxstreet-provider-logo1-en.gif7http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-12-16.htmlExpectation. As the new year draws ever closer, uncertainties could hardly be greater. The sovereign debt crisis has also become a financial sector crisis and is starting to threaten the non-financial private sector, as well as social cohesion in some countries. Nevertheless, we remain confident that the European economy will bottom out this winter, followed by moderately better growth towards about 1.5% annualized at the end of 2012. Determinants. Slower global growth, harsh austerityFri, 16 Dec 2011 13:27:11 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-12-16.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-12-09.htmlHopes. The European debt crisis continues to cause ripples. We, however, remain confident that it can ultimately be defused – although the ECB disappointed market participants' heightened hopes of more aggressive bond buying soon (page 2). Outlook. Nevertheless, the crisis in confidence will weigh on the pace of the global recovery. But we still do not expect a slide back into a worldwide (growth) recession. Another round of monetary and liquidity policy accommodation as well as a tangibleFri, 09 Dec 2011 13:20:56 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-12-09.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-12-02.htmlOffensive. Last week, we wrote about a powerful crisis reaction from central banks coming soon. This week then brought a first strike! In a concerted move, the six leading central banks flooded markets to re-activate the monetary transmission mechanism and avert a credit crunch. Relief. Equity markets rewarded the move with a veritable share price rally. The euro also posted strong gains. So far, neither changes in government, far-reaching consolidation programs, nor bailouts and firewallsFri, 02 Dec 2011 13:50:44 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-12-02.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-25.htmlDistrust. Not a bit of relief, quite the contrary! The debt crisis continues to spread – despite new governments, far-reaching restructuring measures and an intensified crisis management. But market participants' distrust remains high. Italy is merely the most prominent example. Italy. Neither the political restart, nor the ambitious consolidation & reform package, the upcoming primary surpluses or a sustainable public-sector debt burden (even in a more unfavorable environment, pages 4-7)Fri, 25 Nov 2011 14:46:16 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-25.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-18.htmlContagion . The debt crisis drags on! Despite rigid austerity & reform measures and major political changes, investors’ fears are not abating – quite the contrary. This week, market participants were increasingly zeroing in on Spain, France, Austria and even Finland. This illustrates that it is really an issue of confidence, which needs to be restored by aggressive policy actions. Ramifications . The dampening effects of the debt crisis on economic growth are becoming visible, which shouldFri, 18 Nov 2011 15:04:06 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-18.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-11.htmlMistrust.  The debt crisis drags on! Investors were increasingly doubting the ability of policymakers to resolve the problems. The euro plummeted, while risk premiums of periphery countries skyrocketed. Even the announcements that Berlusconi & Papandreou would resign did not help – with investors waiting for Berlusconi to literally leave office. Exuberance.  Markets targeted primarily Italy this week, driving government bond yields to an interim record high 71⁄2% (a level thatFri, 11 Nov 2011 14:21:39 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-11.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-04.htmlDébut. He came, he saw, he cut – that sums up the interest rate decision after Draghi took office, when to everyone’s surprise the ECB Governing Council cut the refi rate yesterday by 25 basis points to 1.25% and, therefore, removed half of the tightening from the spring. The roadmap for the unconventional measures remains unchanged. Markets had priced in rate cuts, but not at such an early date. Reactions. The euro, already rattled by the squabbling over Greece, initially eased further;Fri, 04 Nov 2011 14:42:19 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-11-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-28.htmlBreakthrough. The negotiations were hard and tough. But on Thursday morning, the overall package was in place. While it cannot draw a line under the debt crisis, it can presumably halt the downward spiral, prevent further contagion, and give Greece room to breathe again. Although many details still have to be ironed out, investors were satisfied; the euro and equities posted gains. Haircut. Private creditors will take a voluntary haircut of 50% on their nominal claims on Greece. ThatFri, 28 Oct 2011 13:18:07 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-21.htmlHope. Sarkozy and Merkel raised expectations two weeks ago when announcing a comprehensive plan to address the debt crisis by the 23 October summit. As we discussed at the time, while we think this is credible in terms of substance, we always worried about the time line. Ultimately, the G20 summit on 3 November is the real deadline. However, on present information, a decision should be announced this Wednesday. Package. Otherwise, disappointment will be writ large, and probably not only onFri, 21 Oct 2011 13:13:38 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-21.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-14.htmlHope. The silver lining on the horizon of the debt crisis and of the recession fears is becoming broader and brighter. Good news is becoming more frequent, hope is spreading, and optimism is beginning to take root. Breakthrough. This is most apparent on the debt front. Last weekend’s meeting between Sarkozy and Merkel brought a strong commitment to deliver a comprehensive package at the European Summit on 23 October to finally turn the corner on the debt crisis (see Weekly Comment).Fri, 14 Oct 2011 13:15:50 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-14.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-07.htmlCentral banks. When (fiscal) policy is extensively hogtied, it is up to the central banks to counter the economic slowdown, prevent the debt crisis from spreading, and ensure that funding and financial markets in general are functioning. And central banks are acting! Fed. With “Operation Twist”, the Fed had spearheaded additional quantitative easing measures in late September. Given the fragile economy, Fed Chairman Bernanke held out the prospect of additional measures this week. RecedingFri, 07 Oct 2011 12:45:14 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-10-07.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-30.htmlDebt crisis. After the almost unbroken spate of bad news, this week brought some rays of hope about Europe's ability to get a grip on its financial problems. The previously precarious sentiment improved; European equities posted strong gains. European TARP. The reason for this was speculation on leveraging the EFSF via a special purpose vehicle created by the EIB. This SPV would issue bonds and invest the funds to buy distressed government bonds. Issued bonds could be used as collateral forFri, 30 Sep 2011 12:50:20 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-30.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-23.htmlChallenge. Growth weakness, recession fears, debt crises, a negative rating drift and stock price losses everywhere – the economic and financial environment could hardly be more difficult! Policymakers and central banks are tireless in their efforts to stem the downward spiral. Bold stroke? US President Obama is even attempting to square the circle and (again) plans, in the short term, to kick-start the economy with billions in new measures, and in the medium-to-longer term to consolidate theFri, 23 Sep 2011 12:44:13 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-23.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-16.htmlForced to act. Growing concerns about the solidity of Italy’s public finances, combined with speculative attacks, have seen not only yield spreads of Italian government bonds and CDS premiums rise (see chart), they also compelled the government to expand its July austerity package and bring forward several consolidation initiatives. Package. With fiscal consolidation worth roughly EUR 60bn over the next three years, the Cabinet is underscoring its commitment to adhere to the fiscal targetsFri, 16 Sep 2011 12:09:21 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-16.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-09.htmlTurbulence. Financial markets just can’t take a break. Weak economic data, the limping US labor market, and above all further tensions in EMU are keeping volatility high. At least the German Constitutional Court’s ruling has cleared the way to extend the EFSF – even though it called for a stronger parliamentary say. Risks. Numerous stumbling blocks nevertheless remain. The vote on the EFSF, the ESM and the second Greece bailout package in national parliaments is still pending. TheFri, 09 Sep 2011 11:41:22 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-09-09.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-08-12.htmlPanic . Roller-coaster rides, equities at (multi) year lows, crisis meetings, speculative attacks on France, record-low Treasury yields as well as the continuing run on gold as the No. 1 crisis hedge – all this reflects the fear of market participants. Sustained relief is so far not in sight. Central banks . Not even the Fed’s commitment to its zero-rate policy at least through mid-2013 – coupled with the preparedness to implement further quantitative easing measures – succeeded in reallyFri, 12 Aug 2011 13:51:07 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-08-12.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-08-05.htmlAngst. Alongside the never-ending global debt crisis, the increasingly deteriorating global economic climate is driving markets down. Growth forecasts are being lowered – but downside risks dominate nevertheless. Global recession angst is spreading. Disappointments are coming primarily from the powerhouses so far –Emerging Markets – as well as the US (see chart below). US. After the weak start to the year and the recent body blows, we have cut our GDP forecasts. The economic normalization inFri, 05 Aug 2011 13:19:55 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-08-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-29.htmlCountdown. Policymakers in the US may still have a few more days left to finally reach an agreement on raising the statutory debt limit. But the clock is ticking inexorably, without any sign of a (rapid) agreement in sight. The positions of Republicans and Democrats are apparently irreconcilable when it comes to tax hikes (pages 2-5). Poker. The only hope remaining is that a last-minute compromise can be reached that allows both sides to save face. Much more than declarations of intent are noFri, 29 Jul 2011 11:54:03 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-22.htmlHard numbers. When GDP growth figures for the past spring start to be released in the coming week, it should become apparent that the global economy has lost a great deal of momentum after starting the year on a strong note. This holds true especially for Europe. Eurozone. Official data will not be available until mid-August, but the hard data plugged into our GDP model shows EMU-wide growth of only 0.3% for the second quarter. This was, however, attributable primarily to a technical reactionFri, 22 Jul 2011 13:03:34 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-15.htmlEscalation. The shock waves emanating from the global debt crisis continue to spread. While the US is facing the threat of the loss of its AAA rating because of the deadlocked debt ceiling negotiations, the crisis in Europe has definitely reached a new level. Italy. As if the political impasse on a second Greece bailout and the junk status of Irish bonds were not bad enough, the crisis has now spilled over to a core EMU country – Italy. Yields and insurance premiums of Italian government bondsFri, 15 Jul 2011 11:38:52 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-08.htmlChange. The times they are a changin'! China was the first economic power to exit from the global financial crisis and regain its former strength. In addition, it was emerging markets (Emerging Asia) that for the first time led the global economy out of a deep recession. Together with the US, China is now setting the tone of the global economy. Slowdown. The times of double-digit growth rates in China could therefore be over – since China already had to counter-steer against an overheatingFri, 08 Jul 2011 12:30:27 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-01.htmlDoubts. Concerns about the global economy have continued to grow recently. Sentiment is deteriorating and the PMIs are clearly heading south worldwide. That is nurturing doubts about our soft patch-scenario. Purchasing power. But support for the second half should come from lower energy and food prices. Until recently, rapidly rising oil and agro prices had undermined consumers’ purchasing power. In the US, they even absorbed the entire increase in disposable incomes. That should change soon,Fri, 01 Jul 2011 13:19:59 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-07-01.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-24.htmlEpisode. The fear of a rapid, disorderly default by Greece has been banished for the time being. The confidence vote for the new cabinet makes passage of the multi-year austerity and privatization package probable before the end of this month. That will clear the way for the disbursement of the fifth EU & IMF credit tranche. Greece can therefore meet its short-term payment obligations (pages 2-3). Fear (Phóbos). The Sword of Damocles of a Greek government default continues, however, toFri, 24 Jun 2011 14:55:22 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-24.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-17.htmlDecision. The markets are awaiting the decision of the EMU heads of government on how to expand the rescue package for Greece with bated breath. The divide between the opposing camps has remained wide recently. And the ECB opposed an "involuntary" involvement of private creditors. Despite the escalation of the situation, there were, however, no signals from central bankers that the gradual normalization of interest rate policy is being called into question. Solid. Above all the situation inFri, 17 Jun 2011 10:30:01 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-10.htmlDoubts. The latest US economic data were a bitter disappointment; first and foremost the sentiment and labor market numbers. Analysts are lowering their forecasts in droves and are even calling the upswing into question (double dip). We, however, do not wish to go that far. Revision. Although we too must lower our GDP forecast for the second quarter, we are sticking to the picture of an only temporary growth slowdown. We do not see an end to the upswing, even though the risk of this happeningFri, 10 Jun 2011 13:11:16 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-10.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-03.htmlECB . When the Governing Council members convene next Thursday for their scheduled meeting, the key words in the press release will be ratcheted up a notch from ”monitor very closely“ to ”(strong) vigilance“. This will be the signal for the next 25bp rate hike at the beginning of July. It will be followed by further mini moves on a quarterly basis. At the end of 2012, the refi rate will stand at 2¾% (see chart). Full allotment. The fact that the ECB has raised its growth and inflationFri, 03 Jun 2011 11:41:08 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-06-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-27.htmlUpwards. Germany’s economy posted exceptionally strong growth at the beginning of the year with 1½% qoq. It has finally reached its pre-crisis GDP level again (see chart). For 2011 on average, we have therefore revised up our GDP forecast to 3½% from 2¾%. Broad-based. Along with the weather-related catch-up process in the construction sector, final domestic demand is increasingly contributing to growth. The upswing has become much more robust and will continue! Question marks. ThisFri, 27 May 2011 12:27:51 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-27.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-20.htmlFull speed. The EMU-wide economy powered ahead in the first quarter, growing much stronger than expected and bringing the eurozone back to the top of the growth league among industrialized countries. At an annualized plus of 3.4%, economic growth was twice as high as in the US, while Japan's economy has slid back into recession. Breadth. When GDP components are released over the next few weeks, it should become apparent that the EMU's upswing is broadening. At least for the two growthFri, 20 May 2011 12:26:32 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-20.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-13.htmlMay windfall. Germany’s finance minister can look forward to higher tax revenues. Yesterday, thanks to the better-than-expected economy, the tax projection working group put the additional revenues at EUR 18bn for this year. In 2012, the number is expected to reach EUR 21bn. Consolidation. The additional funds should primarily be used to consolidate public budgets. The further reduction of public-sector deficits must remain the top priority. The debt crisis in the EMU periphery, as well as theFri, 13 May 2011 13:27:17 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-13.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-06.htmlTrain wreck. The US administration is facing imminent default when the federal debt hits the statutory debt limit mid-month. Extraordinary measures could still delay this deadline until the summer. Then, however, the House and the Senate will have no alternative but to simply rubber-stamp the raising of the debt ceiling. Dissent . The reason for this is that a compromise on sustainable cuts to the federal budget is not on the agenda any time soon. The presidential election is too close, andFri, 06 May 2011 12:46:03 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-05-06.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-29.htmlUpwards. Despite the rise in the price of oil and persisting debt problems, the economic recovery in the euro zone is proving astonishingly robust. In the process, the sustained recovery of investment activity is increasingly spilling over to European labor markets. That is the final piece of the puzzle in the picture of a self-sustaining upswing. Jobs. The number of gainfully employed, the most informative indicator for the development on the labor market, continues to post solid growth. OurFri, 29 Apr 2011 11:30:49 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-15.htmlUpbeat. Despite global economic headwinds – German GDP posted strong growth at the beginning of the year. With roughly 1% qoq (or about 4% annualized), Germany therefore assumes pole position among the industrialized countries in terms of growth again. Drivers . Part of the dynamic is, of course, attributable to the unusually rapid and early recovery of construction after the weather-related slump at the end of last year (see chart). But investment in machinery and equipment and privateFri, 15 Apr 2011 11:22:02 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-08.htmlECB. The European Central Bank has made good on its "announcement". Despite a smoldering debt crisis and persisting doubts about the solidity of commercial banks, it initiated its tightening cycle yesterday. For the first time since July 2008, the refi rate and the interest rate corridor were raised by 25 basis points. The key rate now stands at 1¼% (p. 2-3). Justification. The reason which the ECB cited for its mini-move was the emerging inflationary pressure that threatens to rip the thusFri, 08 Apr 2011 11:06:25 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-01.htmlEngine. It was industrial activity that provided the global economy with a strong tailwind at the turn of the year. There was a substantial improvement in global business climate indicators, order books were filled, and production rose strongly. Now, however, the global economy is increasingly encountering headwinds. Brake. While the culprit so far was "only" the strong increase in prices paid for raw materials, the ramifications of the Japanese catastrophe are now coming into play. The recentFri, 01 Apr 2011 11:48:22 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-04-01.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-25.htmlPortugal. As the third eurozone country, Portugal is now set to seek protection under the EU/IMF bailout packages. Following the defeat of the latest austerity package in parliament and the resignation of the Socrates government, this step has probably become inevitable. In light of the huge yield spreads and the adverse redemption profile, it was already doubtful whether the country could have shouldered the strains alone. Economy. The government crisis will likely exacerbate the country’sFri, 25 Mar 2011 12:43:38 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-25.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-18.htmlJapan. The catastrophe is a humanitarian tragedy of unimaginable proportions. But it also means a considerable economic strain for the country itself and – depending on how the nuclear disaster unfolds – also for the global economy as well as financial and commodity markets. Hope. Massive damage to the infrastructure in conjunction with the closure of production plants and service facilities as well as electricity rationing could see real GDP contract in spring. We are still hoping for an onlyFri, 18 Mar 2011 13:21:51 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-18.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-11.htmlForerunner. The euro zone continues to face a mountain of unresolved problems. Not even possible successes at the pending summits will bring a final solution. Nevertheless, it is virtually certain that the ECB will initiate an interest rate reversal as early as April. The decisive move is designed to hold inflation expectations in check. This will also give the Swiss National Bank more room to maneuver. While the strong CHF is still causing headaches, an end to the very loose monetary policyFri, 11 Mar 2011 10:55:48 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-11.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-04.htmlAnnouncement. The message could not have been any clearer: The European Central Bank will raise its key interest rate soon, probably as early as the coming month. That was the central message from Jean-Claude Trichet’s press conference yesterday. The refi rate has been at a record low level of 1% since May 2009. Expectations. The interest rate reversal is, therefore, coming much earlier than had been expected so far. Markets and analysts had been betting on an initial tightening move only thisFri, 04 Mar 2011 12:42:53 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-03-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-02-25.htmlDomino effect. The fears have materialized! With Libya, the popular uprisings in North Africa and the Middle East have hit a large oil producer. Production was cut, and the oil price skyrocketed briefly to USD 120 per barrel (Brent future). Supply. Even if Gadhafi is toppled quickly, the oil price will remain at current levels, at least short term. While OPEC can step into the breach and ensure adequate global supply thanks to ample free production capacities, the ongoing politicalFri, 25 Feb 2011 13:41:56 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-02-25.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-02-18.htmlProposal. This week, President Obama presented his 2012 budget plan, praising it as a successful compromise between economic requirements and investment in the future of the country. Assessment. While expenditures for infrastructure and education simply cannot be high enough (see chart), we are critical of the recent tax deal – since there is mounting evidence that the recovery is becoming self-sustaining. Above all, however, expenditures are driving the federal debt to astronomical levels.Fri, 18 Feb 2011 14:32:58 GMThttp://www.fxstreet.com/fundamental/analysis-reports/communication@unicreditgroup.eu (UniCredit Group)http://www.fxstreet.com/fundamental/analysis-reports/friday-notes/2011-02-18.html