The Federal Reserve and the ECB have been highly successful in influencing asset prices as part of their effort to cushion the shock to the economy from the Covid-19 pandemic. However, one might wonder whether today’s relief could cause an investor’s headache tomorrow. The difficulty of an exit strategy does not imply that certain monetary tools should not be used in the first place. After all, they do have positive effects. However, the likelihood of a bumpy normalisation process of monetary policy calls for careful preparation by central banks as well as investors. These considerations could become particularly relevant should the recovery in 2021 end up surprising to the upside.
The resurging pandemic and tighter sanitary restrictions in many Eurozone countries pose a new threat to the economic recovery after the first wave of virus was generally brought under control. The latest economic indicators for the Eurozone suggest that economic momentum is slowing. However, there has not been a collapse like the one observed in late March and April...
The Pulse for Germany offers an interesting picture this week. In general, the economic situation has clearly improved in the period September-November compared to the preceding three-month period. This is most obvious in the manufacturing and construction sectors...
Although the economic impact of the November lockdown will certainly not be as harmful as the one last spring, there is still some uncertainty over the size of the Q4 2020 GDP contraction. The INSEE and the Bank of France both estimate that the economy was operating at 96% of normal levels in October, before falling back to 88% in November...
Google's latest report on mobility (Google Mobility Report), published on November 29, shows encouraging momentum in customer traffic of retail and recreation in Europe at the end of that month...
