Weekly Economic Insights – April 23rd 2018 – US and eurozone rates, Chinese Growth & The Sovereign Money Initiative

Economists' insight: The Fed steals Donald Trump’s thunder

Economist insights: Inertia of long-term rates in the US and the euro zone, stable Chinese growth (p.1)

›       Despite the rise in oil prices, 10-year yields have remained low in the US and the euro zone, due to investors’ wait-and-see attitude in light of international trade tensions…

›       … these low yields could persist if, as we expect, central banks confirm that they intend to use caution in the context of increased uncertainty

›       In China, real GDP growth was stable at 6.8% in Q1 2018 for the third quarter in a row. The slowdown in credit growth continued in March  


Focus Switzerland: “Sovereign Money”, considerable economic and financial risks (p.4)

›       On 10 June 2018, the Swiss electorate will be called on to vote in a referendum on the implementation of a federal popular initiative, the “Sovereign Money Initiative”

›       This reform firstly aims to prohibit banks from creating money, granting the SNB the exclusive power of new money creation…

›       … while, secondly, enabling the SNB to give the new money it creates, free from corresponding debt, to the federal government, the cantons, and the private sector

›           Our analysis shows that this could lead to a decline in Swiss economic activity from the start of its adoption, reduce GDP growth potential over the medium term, and erode the franc’s credibility in the longer term

Weekly Economic Insights - April 23rd 2018 - US and eurozone rates Chinese Growth and the Sovereign Money Initiativ