News Round Up – USA-Iran Tensions, Turkish Change, Mini-BOTs & Central Banks

Stockholm (Ekonamik) – The news this week continued to be dominated by tensions between Iran and the USA. The conflict almost turned hot with the US President admitted to calling off a planned attack on three Iranian sites focusing instead on more sanctions and talks in order to “Make Iran Great Again“. The Nymex WTI Crude Oil index was virtually unchanged over the week following the steep rise in the beginning of June.

Closer to Europe, the main news was the mayoral election in Istanbul, where the Erdogan’s AKP was defeated in Mayoral elections for the second time this year, after an election re-run was suspiciously demanded by authorities. Across the Dardanelles, the ongoing negotiations for the European Commission and the ECB’s leadership continued to dominate the news, with France’s Macron deriding the Bundesbank’s Weber‘s recent taste for the ECB’s bond-buying programmes as opportunistic. Still in Europe, we heard the CEBR’s view of Italy’s Mini-BoTs and how they “could go from a parallel currency to paving the way for Italy to abandon the Euro altogether”. To delay further escalations from Italy, the European Commission has extended the deadline for the country’s government to comply with Eurozone budgetary rules. However, with only one extra week, the reprieve seems limited.

Among central banks, Norway, the UK, Japan and Brazil held their monetary policy meetings this week. All held their rates, except for Norway, where Norges Bank raised its policy rate from 1% to 1.25%. Datawise, flash estimates of June Composite PMIs for the Eurozone and the USA showed both economies continued to lose momentum.

Equity markets globally performed well, with the S&P 500 index, France’s CAC 40, the UK’s FTSE 100/250, Germany’s DAX, Italy’s FTSE MIB, Portugal’s PSI 20, Stockholm’s OMX 30 all rising over the last 7 days, even if the momentum reversed midway through the week. In bond markets, the US Treasury yield curve fell and flattened with the 10yr-3month term spread increasing from -14bps to -4bps. In China, the opposite took place with the yield curve steepening as the term spread increased from 78bps to 97bps over the week.

Finally, in tech news, we took a deep-dive at Facebook‘s suggested cryptocurrency, the Libra, its feasibility and implications.

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