#Weekly #Review - Financial Markets & Economics: Commentaries by Fabian Wintersberger

One year ago the corona pandemic reached Europe and same is true for the Chinese approach to fight the pandemic. We all know the pictures from Italy and how people and governments all around the world started to panic.  Because of uncertainty - which partly lasts until today because of a lack in valid data - countries all around the globe started to shut businesses down and to impose lockdowns over the population: All EU countries (except Sweden), India, Argentina, Australia, New Zealand, many US States ( democratically led ), to name just a few. The world economy was switched off. I want to use todays' commentary to look back and to cover the economic impacts of the measures that governments took to fight the pandemic and how governments & central banks tried to fight the consequences that their own actions caused. Further I want to talk about the present: The start of vaccine-programs seemed to be the game changer. However, with new news about mutations of SarsCov-2, I observ...

After last weeks ECB meeting it was the Federal Reserves' and the Bank of Englands' turn this week to give some guidance about future monetary policy. Alike at the ECB meeting there was nothing to expect from them concerning a change in the rate of interest: Interest rates will stay at historic low levels. None of the big central banks wants to become the scapegoat who has killed economic growth because of an end in low interest rate policies. Although one difference become obvious at those press conferences: In contrast to Christine Lagarde and her colleagues at the ECB, Jerome Powell and the Fed is still not worried  about the big increase in interest rates and sees no need to act against the rise in US treasury yields. Christine Lagarde and the ECB is worried about the fast increase in market rates this year. Citing Bloomberg:  "Lagarde said certain recent market moves would become “undesirable” if they persist, citing negative implications for the economy and inflati...

Forecasting is a complex art, they say, especially when it means projecting the future . This is also true these days, mainly because we are facing 1) times of extreme economic upheaval and 2) a public health crisis. Those are very hard to predict for me as an economist but significantly influence the economy. How will markets and economies develop shortly? Is everything going to be alright in 2022, and have financial markets just anticipated this? After we have seen a strong rotation back into tech this Tuesday, which continued on Wednesday after US-CPI data matched estimates. Maybe it has had to do with the 10y US-treasury yield consolidation, although they are rising again this Friday morning.  At first sight, there are no surprises about the CPI data, but the devil is in the details. I do not want to leave out that the Bureau of Labor Statistics  has estimated many prices because they were not observable because of business closures and other policy measures to combat the ...

For several weeks now we have heard a lot about inflation fears, inflation expectations & inflation in general. Therefore I decided to write about inflation this week. After being more or less absent for more than a century, investors expect that inflation will return sometime within the next few years. Since day one of 2021 investors started to sell US treasuries, pushing inflation expectations to highs which we have not seen since 2008 . The article by Bloomberg journalists Vivien Lou Chen, Daniela Sirtori-Cortina and Edward Bolingbroke says that the anticipated annual inflation rate for the next half-decade exceeded 2.5% for the first time since 2008 -- aided by climbing oil prices. We got used to the fact that allegedly the general price level has to rise over time. Economists and Central bankers claim that they have to make sure that prices do not fall, that we do not experience deflation. According to proponents of moderate inflation there is a risk when the general price le...