COMMENTARY: ECB capital key dilemma on reinvestment
The European Central Bank faces potential charges of discrimination from Italy over maintaining its quantitative easing programme next year, reflecting important technical changes in allocating reinvestment of national central banks' maturing bond holdings in 2019, write Ben Robinson and David Marsh.
Italy has adopted its draft budget. Reactions from the European Commission were predictably negative, anticipating a drawn out and difficult negotiation. However, the mood in Brussels seems that of avoiding confrontation as far as possible and many see room for a possible compromise, writes Antonio Armellini.
Euro area countries must continue to address their fiscal positions and hope the next crisis does not happen in the next three years, said Jeroen Dijsselbloem, former president of the Eurogroup, at an OMFIF roundtable in Singapore. In the light of fiscal policy disputes in the euro area, efforts to reform EMU are in jeopardy.
Despite much huffing and puffing about China, the US Treasury's autumn foreign exchange report is status quo. The substance is unsensational, and little changed from the last report in April. Once again, there is no 'manipulation' finding, despite President Trump's accusations. The report got the main conclusions largely right, writes Mark Sobel.
Gold has fallen out of favour in financial markets, hitting a 19-month low in August. However, it is seen as a good hedge against rising inflation. While the Fed reduces its balance sheet, gold could be particularly attractive as a safe haven against equity market crashes, writes Aimee Bowkett.
Stock market volatility tends to reach its peak in October, underlined by famous crashes in 1929, 1987 and 2008. Cross-currents in the world economy make this October particularly pivotal, especially in the light of the tug of war between good news out of the US and bad news out of China, writes Trevor Greetham.
The result of Sunday's Bavarian state elections has badly shaken the unsteady Berlin coalition of Angela Merkel's CDU and the SPD, toughening the chancellor's already difficult task of winning consensus for strengthening the structure of European economic and monetary union, writes David Marsh.
The global economy is slowing, and headwinds are unlikely to disappear soon. But looking across small advanced economies – helpful indicators for the health of the world economy – suggests this is more a moderation in economic momentum than a marked slowdown, writes David Skilling.