Dr. Platon Monokroussos, Chief Market Economist, Deputy General Manager, Eurobank Ergasias S.A
HIGHLIGHTS
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: As expected, the Fed stayed put on interest rates yesterday after raising the federal funds rate by 25bps last month, the first increase in nearly ten years. In the accompanying statement, the Fed adopted a cautious tone leaving options open as to whether it will stand pat or will push interest rates even higher at the upcoming meeting scheduled for March 15-16. Reacting to the tone of the statement, major US stock indices ended lower overnight, the USD weakened and the 2/10-yr Treasury yield curve undertook some steepening.
GREECE:. According to some press reports, the IMF opposes the Greek government’s proposal for an increase in social security contributions as a means to avert a cut in existing pensions amid concerns that such a development could hurt employment and undermine the competitiveness of the economy. Instead, the Fund reportedly argues that the pension saving target can only be reached through, inter alia, an average cut of 15% in pensions. .Meanwhile, the Greek government is reportedly mulling favourable amendments to the income tax regime of farmers and freelancers.
SOUTH EASTERN EUROPE
BULGARIA: On January 27th, the EU Commission published the annual progress report under the Cooperation and Verification Mechanism (CVM). The Cooperation and Verification Mechanism (CVM) was set up at the accession of Bulgaria and Romania to the European Union in 2007 in order to monitor their progress in the areas of judicial reform, the fight against corruption and organized crime so as to join Schengen area at a later stage.
CESEE MARKETS: Emerging stock markets extended Wednesday’s gains in European trade today after the Fed stayed put on its monetary policy yesterday, while hopes for further monetary stimulus for the ECB and the Bank of Japan in the imminent future also favoured investor sentiment towards risky assets. Along similar linesCESEE bourses, currencies and local-currency denominated government bonds moved broadly higher in European trade on Thursday underpinned by yesterday’s FOMC meeting outcome.
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Daily Overview January 28 2016
