Volatility: back to normal

Michala Marcussen, Group Chief Economist, explains the latest economic trends.

Economic and financial analysis by Michala Marcussen, Group Chief Economist.

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The trillion-dollar question

The latest forecast from the US government’s Congressional Budget Office (CBO) paints a dismal picture for the budget deficit of the World’s largest economy. After clocking in at $665bn in 2017, the CBO expects the deficit to widen to $804bn in 2018 and reach close to one trillion dollars in 2019. For bond markets, this projection entails a significant increase in the net supply of Treasuries and comes just as the Federal Reserve is embarking on balance sheet reduction. The Fed’s guidance suggests a $250bn reduction of its Treasury holding in 2018 and an additional reduction of $360bn next year.

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Bitcoins, cash and tulips

Bitcoins generated much excitement in 2017, starting off the year valued at just over $1 000 per bitcoin and closing the year at around $10 000, having peaked at close to $19 000 in mid-December 2017. While the extreme volatility of Bitcoin generates both spectacular gains and devastating losses, it significantly reduces the ability of the crypto-currency to serve as a means of payment; the purpose for which it was originally designed. Michala Marcussen, Group Chief Economist, explains the latest trends around the bitcoin.

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US tax reform: Europe must be vigilant

The text of the US tax reform bill passed by the Senate during the night of December 1 now has to be reconciled with the version passed by the House of Representatives on November 16, before the final bill is presented for vote by both Houses, and signed by the White House. The Republicans are hoping to finalize this process before Christmas.

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What is the economic environment as Macron’s term begins?

Whereas the two previous five-year presidential terms had been marked by major slumps – a global recession in 2008 and 2009 and the euro zone crisis in 2011 and 2013 – the new French president will benefit from a far healthier economy as his term begins.

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