Weekly Economic Insights - 17 December 2018

Macro Highlights - 12/19/2018

Highlights of the week

Economist insights: In the eurozone, end of ECB’s net asset purchases and a further decrease in PMIs, postponement of the risk of a US government shutdown to 21 December, monetary status quo and six-month extension of the stock market equivalence in Switzerland

European Central Bank

  • The ECB confirmed that it will end its net asset purchases at the end of 2018…
  • …. but the flexible parameters of its reinvestments should enable it to maintain control over long-term yields


  • PMIs down once again: further slowdown in activity in the services sector

United States

  • 2019 budget: the risk of a Government shutdown has been postponed to 21 December 2018
  • Negotiations between Congress and Donald Trump over the financing of the Mexican border wall fuel the uncertainty


  • The SNB opted for the monetary status quo and confirmed during its press conference that it should not precipitate its exit from its accommodative monetary policy
  • The EU announced on Monday 17 December that it was extending its recognition of the equivalence of the Swiss stock market by six months

Focus France: Most of the President’s announcements concern cuts in social security contributions to try and contain the yellow vest revolt

  • Tax exemption for overtime pay, cancellation of the rise in the CSG tax for half of pensioners and increase in the employment bonus for more modest households in order to contain the social tensions
  • This increase in social spending and lower tax revenues will result in a rise in the public deficit to 3.6%, according to our calculations
  • The deterioration of public finances is likely to weigh on household consumption in 2019 and strain the relations with European partners



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