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.
LONDON (Reuters Breakingviews) - The worm sometimes turns. That could easily be the case for sterling, which has fallen to its lowest in nearly a year against the dollar and the euro. Its latest losses are largely due to growing concern that Britain might suffer a chaotic exit from the European Union. Even a glimmer of hope of a better outcome will spark a scramble to buy pounds.
LONDON (Reuters Breakingviews) - Britain’s currency is jumpier than it might look. Options prices offer investors an easy way to check expectations of how much sterling is expected to move around. The relative calm implied by these measures masks a Brexit levy that only becomes apparent when they are compared with other major exchange rates.