Bringing you live news and features since 2006 

Euros

Weak consumer confidence has put pressure on the euro, says Standish’s Leduc

RELATED TOPICS​

David Leduc, manager of the BNY Mellon Global Strategic Bond Fund, says European policy responses to the crisis have erred on the side of being reactive, rather than proactive, which has led to a lack of investor confidence and has put pressure on bond spreads and on the euro. 

He says resolutions could include the European Central Bank monetising the public debt, movement toward increased fiscal union across all Eurozone states, or potentially the exit of some countries from the European state.

“Needless to say, all of these options come with considerable political challenges. Our view is that the implications are negative for the single currency, while the outlook for bond spreads is very uncertain. While the economic costs involved in a break-up provide tremendous incentive to work out relevant issues, the process will probably result in continued volatility,” Leduc adds.

In terms of our Eurozone exposure, he continues to favour Italy given that it is in the best health of all the peripheral Eurozone economies; it did not accumulate the private sector leverage seen in some other countries, and its banking system is well capitalised. 

Furthermore, Italy is slightly more competitive than many of its peers, as the proportion of its exports to non-Eurozone economies is on par with that of Germany.

The sovereign solvency of Ireland, Portugal, Greece, and even Spain is now being questioned.

“Meanwhile, our outlook for German growth is positive; domestic demand is strong, and export income remains robust. However, this has given way to domestic inflation, which has historically been a contentious issue for the German public. Looking ahead, given the poor health of the Eurozone, some higher-than-average inflation on the part of the German economy is required in order to rebalance current accounts in the region towards a model of increased saving for the peripheral countries, along with a large-scale liquidity programme by the ECB,” adds Leduc.

Latest News

Solactive writes that it has expanded its collaboration with Kiwoom Asset Management by providing the underlying indices to the KIWOOM..
MSCI has announced the launch of MSCI Private Capital Indexes, writing that with growing investor interest in private markets, high..
Matteo Greco, Research Analyst at Fineqia International, writes that bitcoin (BTC) ended the week at approximately USD68,150, marking a 12.1..
Raymond James Investment Management plans to launch an ETF product platform in 2025 to support strong client demand in alignment..

Related Articles

Scott Kefer, VictoryEx Capital Holdings
Bailey McCann writes that active ETFs are capturing investor interest, according to the latest data from Morningstar, which finds that...
Chris Lo, Columbia Threadneedle
In a recent insight on India by Columbia Threadneedle Investments, the firm reports that the country’s economic reforms, which aim...
With an election on the horizon in the United States a group of ETFs is poised to capture investments on...
Robot worker
Qraft Technologies, based in South Korea, specialises in the use of AI in security selection and portfolio construction....
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by