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The Corner contextualizes the EU’s economy from Spain with exclusive analysis from market leaders.

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ECB’s eventual purchase of corporate bonds: Inflating the bubble?

Markets

MADRID | By Julia Pastor | Even though the ECB dismissed the rumours about its intentions of buying corporate bonds, all market players are asking for stronger actions by the central bank. Such measure could become the ace up the ECB’s sleeve for its December meeting. Given the liquidity surplus in the companies’ debt market (due to the “low interest rates, not to cheap credit,” as experts at Renta4 pointed out), including this sort of assets could add to such surplus. 

In Europe

The 1,697 ‘less significant entities’ of the German banking sector

BERLIN | By Alberto Lozano| This November, the European Central Bank will assume its new banking supervisory responsibilities. Firstly, on 26th October the ECB will publish results of comprehensive assessments that will determine the financial health of 120 banks in the Eurozone. These tests cover approximately 85% of total bank assets. But what about the remaining 3,532 small banks of the euro area?

stress tests
Markets

Is Europe contagious?

ZURICH | UBS | The impact of an EU slowdown on US growth would be minimal: US exports to the EU are a small proportion of GDP (2.8% in 2013), and the secondary effects—the impacts on major US trading partners’ incomes and import demand—are even smaller. For example, a hypothetical 1 percentage point slowing in EU real GDP growth would likely translate into only a 0.1 pct pt drag on US real GDP growth via weaker exports to the EU and to other US trading partners affected by the EU slowing.

EU vs US
World economy

Monetary policy: Does Israel want to become Sweden?

SAO PAULO | By Marcus Nunes via HistorinhasIt may sound strange, but that´s what comes to mind when central bankers start playing “alternative roles”. In the case of Sweden things started unraveling when the Riksbank decided to “prick” a housing “bubble”.

In Europe

Déjà vu: More German investment, but France can’t cheat with reforms

BERLIN | By Alberto Lozano | The debate continues. Paris demands more flexibility, more time and investments in Germany. Berlin says investment will be strengthened, but France cannot cheat and must start with the reforms.

france germany
Markets

Waiting for stress tests…

MADRID | By Álex García.

r_1
Markets

There, but for the grace of ECB, go spreads

LONDON | By Soren Willemann at Barclays | Credit spreads (here, iTraxx Main) have a strong relationship to the ZEW survey of eurozone expectations for economic growth (Figure 1) over long time horizons. In the past months, however, this relationship has shown a significant disconnect: the ZEW survey reveals a material worsening of sentiment, whereas credit spreads have been largely unchanged.

credit spreads ECB