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Pfandbriefbank – not another Heta?

A relatively low-profile entity in Austria – Pfandbriefbank Oesterreich AG (Pfandbriefbank) – is becoming the next critical chapter in the Austrian banking system story, as the reaction of the State of Carinthia to its obligations vis. Heta’s senior unsecured bond guarantees has sparked investor uncertainty about the broader guarantee framework in Austria.

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Will Syriza's bark be worse than its bite?

  • The radical left-wing party Syriza seems bound to win Greece’s election on Sunday.
  • With Greece having most to lose if it left the euro, we suspect Syriza's bark will be worse than its eventual bite.

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ECB QE: Bazooka or fudge?

  • At tomorrow’s Governing Council meeting we expect the ECB to launch a QE programme of at least €500bn consisting primarily of sovereign bond purchases.
  • The programme’s effectiveness is likely to be diminished by concessions to the German-led opposition to QE.
  • Although beneficial, the programme’s economic impact is unlikely to be sufficient to return inflation rapidly to target.

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Draghi's QE Compromise

  • All signs point towards the ECB adopting sovereign QE in the New Year.
  • But given Draghi’s desire to appease the German-led opposition, the design of the policy seems bound to be second-best.

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Abe: Third time lucky?

Last weekend’s election saw Shinzo Abe triumph for the second time in two years to take office as PM for the third time. This stands Abe in good stead to be Japan’s longest serving leader in more than four decades. More importantly, it gives Abenomics the time it needs to re-establish firmer economic growth and reflate Japan on a lasting basis. 

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