23 January 2019

Karsten Junius

Chief Economist, Head Economic Research at Bank J Safra Sarasin
  • The European Central Bank might have to keep rates unchanged longer than it had anticipated only a few months ago. Photo: Reuters

    Fears of a euro area recession overdone

    - Jan 21, 2019 5:15pm
    The euro area has shown no signs of improvement in recent weeks.  Industrial production fell by 3.3 percent year on year in November, its first decline since January 2017. The German economy only managed to expand...
  • The EU Commission’s new president will face a parliament with many more euro-skeptics. Photo: Reuters

    Year-end economic lyric

    - Dec 27, 2018 9:00am
    Europe: Political changes leave their mark on the European economy as institutional uncertainty prevails. After the European elections in May, Jean-Claude Juncker hands over to Manfred Weber as new president of the EU-Commission. He faces a...
  • The policy tools of the Europian Central Bank would ensure accommodative monetary conditions for a prolonged period,  Mario Draghi said. Photo: Reuters

    Market prices a dovish ECB despite balanced outlook for growth

    - Sep 28, 2018 8:32am
    In a press conference on Sept. 13, European Central Bank (ECB) president Mario Draghi presented a fairly optimistic economic outlook with risks to the downside as well as to the upside. While the Governing Council (GC)...
  • The pace of household spending in the UK has outpaced disposable income since the Brexit referendum, pushing the saving ratio to historical lows. Photo: Bloomberg

    UK’s reliance on the ‘kindness of strangers’

    - Aug 22, 2018 4:51pm
    UK wage growth slowed again in June. Since the Brexit referendum, disposable income has failed to keep pace with consumption, forcing households to draw on their savings and borrow more. This is unlikely to be sustained....
  • Very large cap US technology companies have outperformed the Nasdaq 100 significantly since early 2017. Photo: Reuters

    US technology sector is still going strong

    - Jul 24, 2018 3:50pm
    Investing in large US information technology companies appears to be one of the highest consensus trades among institutional investors. US technology companies seem to enjoy a perfect blend of structural and cyclical growth. The MSCI USA...
  • Prior to the June ECB meeting the market consensus was for two hikes in 2019, but now the expectation has fallen to one hike. Photo: Reuters

    Market is pricing a dovish ECB

    - Jun 29, 2018 9:30am
    After the June ECB meeting, the first rate hike was pushed from June to September 2019. Before the meeting the June Euro Over Night Index Average (EONIA) priced in 8bps of higher yields; this fell close...
  • European leaders should acknowledge that national economic policies that worked in the pre-EMU times do not necessarily work now, and definitely not equally in all countries. Photo: Reuters

    Policy proposals in Europe go in all directions

    - May 31, 2018 2:52pm
    Ahead of the EU Summit in June, the discussion about the future structure and governance of the euro area is gaining traction. So far, policy proposals reflect the very heterogeneous views about the ills of the...
  • The Bank of England is likely to increase its base rate in May. Photo: Reuters

    Positive macro environment prevails despite global tensions

    - Apr 19, 2018 11:43am
    Uncertainty around Syria, Russia and the United States-led trend towards more protectionist and confrontational trade policies is providing political headwinds for financial markets. Nonetheless, we reaffirm our positive macro assessment. Protectionist policies will add to the...
  • Populists will advocate against the painful structural reforms necessary for a further deepening of, and risk sharing in the European Monetary Union. Photo: Reuters

    What populism could mean for euro area

    - Mar 29, 2018 8:30am
    Europe’s readiness to enter a trade war should be a wake-up call for those relying on the rule of law, international organizations and cooperation – the pillars of the post-war multilateral system. This would be a...
  • The risk profile is largely shaped by foreign currency exposure. From a risk management perspective, it is generally a good idea to hedge the currency risk for bonds. Photo: Reuters

    Beware of currency risks

    - Feb 28, 2018 9:01am
    Investors often tend to underestimate the currency effect linked to investments in foreign currencies. Bond yields are heavily influenced by foreign currency movements. With equities, currency fluctuations generally even out over time. Investing abroad means taking...
  • The ECB has indicated that it will adjust its policy language pertaining to various dimensions of the monetary stance and forward guidance. Photo: Reuters

    When will the ECB shift to a more hawkish stance?

    - Jan 31, 2018 10:00am
    The European Central Bank (ECB) has rattled markets with a paragraph in its latest minutes noting that its forward guidance is likely be changed along “various dimensions” early this year. In particular, it stated that the...
  • The put/call open interest ratio for the Nasdaq 100 went through the roof in October-November 2017, coinciding with the weakness, which started in large technology stocks at the end of November. Photo: Bloomberg

    Cooling some froth in equity markets

    - Dec 11, 2017 3:43pm
    The frothier elements of global equity markets ‒ mainly technology and emerging markets stocks ‒ will probably enter a period of consolidation in December. While the medium-term outlook remains solid, there is also a feeling that...
  • The October 2017 IMF Financial Stability Report highlights the risk from the high indebtedness of developed countries. Photo: AFP

    Debt developments: More divergence in euro area

    - Oct 23, 2017 9:00am
    Debt-to-GDP ratios among euro area members have diverged since the financial crisis. However, for most countries interest expenses fell. This is a key risk to budget deficits if bond yields increase. We favor underweighting French sovereign...
  • The recent strength in the euro should concern the European Central Bank. Photo: Reuters

    Euro strength detached from rates market

    - Sep 18, 2017 3:21pm
    The euro has continued the upward trend that started with European Central Bank President Mario Draghi’s speech in Sintra, Portugal. Its momentum gained strength following the July ECB meeting, in which Draghi said the governing council paid...
  • Since July, the EUR/USD exchange rate has risen further and the trade weighted euro is almost 5 percent above the level of the latest ECB projections. Photo: pixabay

    ECB minutes tend to favor upward trend of the euro

    - Aug 24, 2017 4:19pm
    The major headline for the market from the ECB minutes was the comment about the euro exchange rate. The ECB’s comment suggests it was fine with a EUR/USD exchange rate rising to 1.15. However, since the...
  • More than two years after the Swiss National Bank ceased to defend the exchange rate floor in mid-January 2015, the economy has managed a solid rebound. Photo: Reuters

    Switzerland benefits from European growth, internal changes

    - Jul 31, 2017 9:32am
    Switzerland managed to adjust to the exchange rate shock two years ago and is growing again. Unemployment rates are falling such that consumer confidence is increasing again, bolstering private consumption. Domestic and imported consumer prices are...

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