LONDON (Reuters Breakingviews) - Sterling is the most sensitive barometer of Brexit fears. The pound slumps each time it looks more likely that Britain may crash out of the European Union without a deal. At the same time, however, UK government bond prices strengthen because bleaker economic prospects mean higher interest rates are less likely. The clearest sign that investors have had enough of the United Kingdom would be when both weaken at the same time.
LONDON (Reuters Breakingviews) - Angela Merkel has called time on her own tenure. The politician who has been Germany’s chancellor for 13 years has decided to not seek re-election as chairwoman of her party, the Christian Democrats (CDU). While she nevertheless wants to serve her full term as chancellor until 2021, her country and the rest of Europe will inevitably start looking ahead to what could be a more polarising era.
LONDON (Reuters Breakingviews) - Finance and business will find Libor a painful and expensive habit to kick. Financial contracts worth more than $300 trillion are linked to the discredited London Interbank Offered Rate. Switching to new benchmark interest rates could disrupt economies as well as markets. Avoiding that outcome will take a lot of money, time, and a willingness to reconcile conflicting interests. Breakingviews explains what’s at stake.
LONDON (Reuters Breakingviews) - French President Emmanuel Macron is finding it easier to build bridges to investors than to voters. A conference on infrastructure hosted by his finance ministry on Monday featured several pitches for why Paris is the ideal centre to develop and finance such projects. The message resonated with fund managers and bankers, who detect a new dynamism and confidence in the euro zone’s second biggest economy. But Macron is having a harder time selling these good news stories to the French electorate. An imminent government reshuffle is unlikely to solve his problem.
LONDON (Reuters Breakingviews) - Good intentions and realpolitik rarely mix. That may well be the case with proposals from a trio of international bodies that seek to address some of U.S. President Donald Trump’s gripes with the World Trade Organization while providing ways for other countries to liberalize commerce without his signoff.
LONDON (Reuters Breakingviews) - An exhortation to focus on “the economy, stupid” is often credited for helping Bill Clinton win the U.S. presidency in 1992. That approach will not work for mainstream politicians in Sweden, which holds an election on Sunday.
LONDON (Reuters Breakingviews) - Familiarity can breed respect in financial markets. Take the case of Bank of England Governor Mark Carney, who may be staying at the central bank longer than previously agreed. Continuity would be a comfort to investors facing a host of Brexit-related uncertainties. But it would send a bad signal in the long run.
LONDON (Reuters Breakingviews) - Plumbing is unseen but vital U.S. sanctions against Iran could affect key aspects of the pipework that flushes money around the world. The European Union, which is trying to save a 2015 nuclear deal with the Islamic Republic, is so irked that German Foreign Minister Heiko Maas on Tuesday called for a cross-border payments system independent of the United States. China stands a better chance than Europe of setting one up.
LONDON (Reuters Breakingviews) - Resembling Turkey is a problem right now. The lira’s alarming slide has made investors wary of any emerging country that shares too many of the same economic and financial vulnerabilities. The most similar, such as South Africa and Argentina, are already hurting. But even those with a less striking resemblance are vulnerable as capital flows out of riskier markets.
LONDON (Reuters Breakingviews) - After digging itself into a crisis, Turkey will probably find the worst way out. The lira’s alarming slide is fanning concern that the country will struggle to meet external financing needs. President Tayyip Erdogan may soon have to choose between imposing capital controls and seeking help from the International Monetary Fund. Defiant self-sufficiency is more his style.