Fresh air

EcoWeek

The United States get back their color...
And the markets some spirit
The euro rebounds

Pressures tended to ease in the financial markets last week. In the eurozone, the recession is likely to be much shorter and milder than we feared (flash estimate of Q4 GDP to be published on 15 February). According to the January PMI survey, activity is already picking up again. The recovery should make it easier to pursue programs to consolidate public finances in the region. A worst-case scenario may well have been avoided. As a result, investors took their eyes off the eurozone, at least temporarily, and overlooked the latest developments concerning private sector involvement (PSI) in Greece and European firewalls. As to the United States, Uncle Sam is already back on his feet. The publication of Q4 2011 GDP for the US (up an annualized 2.8% q/q after 2.5% in Q3 2011) definitively buried fears of a double-dip recession in the United States. The Federal Reserve will remain cautious as long as growth has not surpassed its forecasts, and announced that it did not intend to raise the Fed funds target rate before late 2014 (see our "Overview"). The beginning of 2012 could have been much worse...

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Published On Fri, Jan 27 2012, 17:13 GMT

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BNP Paribas

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