WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Short-term UST bond yields moved higher on newswires conveying that Stanford University economist John Taylor made a positive impression on Donald Trump at an interview on Wednesday as the US President seeks candidates for the post of the new Fed Chairman. Mr. Taylor has criticized the Fed’s easy-money stimulus policies since the financial crisis and has pushed for the adoption of a ruled-based monetary policy, known as the Taylor rule, to guide the Fed’s interest-rate decisions that implies the need for much higher interest rates than the current target range of 1.00%-1.25%. The 2-yr US yield rose to the highest since 2008 and the 2/10-yr yield spread narrowed to the lowest in around a year. On the flipside, the majority of bond yields across the euro area moved lower on press reports suggesting that the ECB will announce at the October 26th monetary policy meeting a nine-month extension of the QE programme, while the amount of monthly asset purchases is still up for discussion. Looking at the day ahead, BoE Governor Mark Carney will testify before the Parliament Treasury Committee and will also speak before lawmakers later in the day.
GREECE: According to the Ministry of Finance, the year to September 2017 State Budget overall fiscal balance registered a deficit of €0.4 bn, versus a Medium Term Fiscal Strategy 2018-21 overall fiscal deficit target of €0.3 bn for the respective period. The respective State Budget primary balance registered a surplus of €4.5 bn and thus a shortfall of €0.1 bn compared to the respective MTFS2018-21 target (primary surplus of €4.6 bn).
SOUTH EASTERN EUROPE
CYPRUS: Despite the intense restructuring efforts of the banks on their portfolios, the ratio of non-performing facilities still remains at relatively high levels. According to the data released by the Central Bank of Cyprus, the stock of non-performing facilities (NPFs) declined by €630mn in June on a monthly basis, bringing the stock of NPFs down by 18% in the period between December 2014-June 2017.
Viewers can log herebelow and read the full report: Daily Overview October 17 2017