Friday 23rd February 2018
February 23rd 2018: John Hardy, head of FX Strategy at Saxo Bank says in today’s client note that: “The latest European Central Bank minutes showed a debate on leaving the door open to QE resumption if conditions warranted, ultimately leading to the dropping of this language in the forward guidance. The headlines have seized on the discussion of the volatility of the euro in the minutes and the phrase that this provided “a source of uncertainty that required monitoring". ECB president Draghi offered a stern rebuttal at the most recent ECB meeting to a (likely offhand) statement by US Treasury Secretary Mnuchin that a weak dollar is a benefit to the US economy. The expectations for ECB policy unwinding have gone into neutral over the last couple of weeks, even with the recent recovery in risk appetite, and this kind of language from the ECB, heavy EUR long speculative positioning, and a rather sharp deceleration in the most recent PMIs are making it tough sailing for EUR bulls. Speaking of positioning, the JPY short is shrinking but still very large. Often, when the JPY is on the move, it is directly traceable to something else afloat in the markets, whether from direct signals from the central bank, or large swings in risk appetite or bond yields. But this recent move feels qualitatively different and rather significant, as if the market is changing its mind about its underlying assumptions (that the BoJ will forever be the policy laggard and as long as we aren’t seeing a market meltdown, carry trades versus the JPY are a no-brainer) and this could lead to a broad-based repricing of the G10’s cheapest currency” -

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Patrick Artus

Patrick Artus

A graduate of Ecole Polytechnique, of Ecole Nationale de la Statistique et de l'Adminstration Economique and of Institut d'Etudes Politiques de Paris, Patrick Artus is today the Chief Economist at Natixis. He began his career in 1975 where his work included economic forecasting and modelisation. He then worked at the Economics Department of the OECD (1980), before becoming Head of Research at the ENSAE. Thereafter, Patrick taught seminars on research at Paris Dauphine (1982) and was Professor at a number of Universities (including Dauphine, ENSAE, Centre des Hautes Etudes de l'Armement, Ecole Nationale des Ponts et Chaussées and HEC Lausanne).

Patrick is now Professor of Economics at University Paris I Panthéon-Sorbonne. He combines these responsibilities with his research work at Natixis. Patrick was awarded "Best Economist of the year 1996" by the "Nouvel Economiste", and today is a member of the council of economic advisors to the French Prime Minister. He is also a board member at Total and Ipsos.

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As the eurozone’s economic prospects remain unfavourable, and improvement in growth is so slow, the recent upswings in sentiment seem insufficient to indicate real recovery. Such a predicament is due to the structural obstacles currently facing the region. Let’s go through three – and attempt to explain what the prerequisites are for a real improvement in growth.

Friday, 12 July 2013 15:03

Why is the world deindustrialising?

Economies around the world are experiencing a noticeable fall in the weight of industry. Manufacturing production and industrial growth is lower than the pace of GDP in the United States, the United Kingdom, the eurozone, Japan, India, Brazil, Central Europe and many emerging countries worldwide. Meanwhile, the weight of services and construction in economies is increasing – to the direct detriment of industry – which is heightening the consequences on commodities, GDP growth and job skills.


Since the early 2000s, monetary policy in OECD countries and emerging countries has become increasingly expansionary. We only need to look at interest rates – which have become abnormally low relative to growth – as an indicator of such a trend. Furthermore, there has been a rapid increase in the monetary base.

There are four possible reasons that can explain why central banks have chosen to switch to an increasingly expansionary monetary policy:

Thursday, 27 June 2013 11:56

What’s next for the eurozone?

Of the economic turmoil in the eurozone in the past several years, four stages stand out.

The first is the private-sector deleveraging and the subsequent decline in economic activity. The second is the bank liquidity crisis and the credit crunch, when banks needed to be financed via central banks. Third has been the segmentation of capital markets across the eurozone as well as a divergence of financing conditions within the region. And fourth, the banking and sovereign debt crises have long-become correlated – thanks to banks’ significant holdings of government bonds.

Until May, the eurozone financial markets had recovered from 2012’s turmoil: the interest rates on peripheral government bonds had fallen, risk premia on bank debts had been reduced, stock markets had recovered and the credit spreads had narrowed. However, the situation is worsening again since the Fed made it clear that it plans to taper its quantitative easing policy.

What’s next?

Wednesday, 19 June 2013 08:06

Does a housing boom always lead to a bust?

For a recent research paper, we – the economic research team at Natixis – sought to evaluate the recurring behaviour of property prices across the major OECD countries. Specifically, we were seeking the answers to two questions:

  1. Are periods of rapidly rising property prices always associated with an ultra expansionary monetary policy and a rapid growth in GDP?
  2. Are property booms always followed by a significant downward correction in property prices?

Of course, as we delved into our research, it became clear that – in order to arrive at a justified conclusion – several aspects needed to be considered, and it didn’t take long for additional questions to emerge.


Considering the disparate employment situation of many developed countries since the onset of the 2008 global financial crisis, it’s interesting to see where exactly the correlation lies between job losses and the effects of the crisis.

In theory, a permanent loss of jobs can be due to any of these three instances: a rise in structural unemployment (i.e. a fall in potential GDP); a fall in the participation rate (which is defined as the proportion of the working age population that is available for work); or a rise in labour productivity (i.e. company efficiency).

Let’s take a closer look at these three possible causes to find out if they are appearing in the US, the UK, Germany, France, Spain or Italy.


As the US, UK and Japan continue to pursue ultra-expansionary monetary policies, many analysts have criticised the European Central Bank’s more conservative stance.


Since the early 2000s, the increase in public and private debt in the United States, the United Kingdom, Japan and the euro area (excluding Germany) has been striking. And with excessive debt being a key cause of the slowdown in post-crisis demand, it’s interesting to consider what other outcomes could become a reality if we continue to persist with expansionary monetary policies.