Breakingviews

Hugo Dixon: Tsipras looks like he is crumbling

By Hugo Dixon
July 1, 2015

With Athens defaulting to the IMF, public opinion moving against the Greek PM and the banks closed, Tsipras seems desperate for a deal with his creditors. But it is not clear they will cut him any slack. They may prefer to deal with his successor.

Capital controls hit Greek economy at worst time

June 29, 2015

Closing the stricken state’s banks would be a disaster at any time of year. But Athens’ capital controls are kicking in just as one of Greece’s main drivers – tourism – hits peak season. Even if Greeks don’t leave the euro, 2015 will be a writeoff.

Hugo Dixon: It’s still possible to stop Grexit

By Hugo Dixon
June 29, 2015

Athens has declared a six-day bank holiday after talks with its creditors broke down. But there are several ways Greece can still avoid quitting the euro. The most obvious is to vote in the coming referendum for the terms offered by the euro zone and International Monetary Fund.

Euro is poor yardstick for euro existential stress

June 22, 2015

The Greek crisis is compromising FX traders’ reputation for being the first and fastest to react to big news. Currency market signals are currently so muddied that stocks and bonds are better barometers of investors’ views on how close Athens is to default or euro exit.

Swiss caught in the wake of massive FX currents

By Edward Hadas
March 19, 2015

Exposure to the European economy has helped Switzerland. The euro has not. The failure of the franc’s peg to the single currency has cut into expected growth, and leaves the central bank searching for a new approach. The lesson: in currency wars, the little guys usually lose.

ECB bazooka a water pistol for emerging markets

January 23, 2015

Between Mario Draghi’s bond-buying plan and the Bank of Japan’s ongoing splurge, central banks are pumping out $1.5 trillion a year in cheap money. The surprise should boost emerging markets wary of rising rates. But fading growth and falling prices will overwhelm the stimulus.

EU insurers’ solvency is shakier than it looks

December 16, 2014

A quarter of Europe’s insurers would fail to meet a basic gauge of capital health if Japan-style low-yield conditions were to persist, recent stress tests found. But actual euro zone yields are even lower. With the bloc on the brink of deflation, that’s not a reassuring sign.

Weaker euro won’t do much to stoke inflation

October 16, 2014

The ECB not-so-secretly hopes a cheaper currency will boost euro zone inflation. Good luck. The fall in dollar-denominated commodity prices is deflationary. And with demand weak, firms will struggle to pass on higher import prices. Only a huge euro slump would bring real relief.

Euro has further to fall

September 5, 2014

The single currency has dropped sharply since the ECB eased policy this week. The central bank now openly hankers for a weaker euro to boost inflation, and is doing all it can to bring this about. Traders sometimes fight central bankers. This time they look happy to go along.

German yield curve is the safest one to play

August 18, 2014

The spread between short- and long-dated bond yields keeps shrinking in the UK, United States and Germany. Stronger economic activity explains the Anglo-Saxon moves, economic weakness drives the Teutonic trend. The trade that relies on euro zone frailty looks the least risky.