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The euro has gained strength due to positive sentiment surrounding infrastructure plans and increased bond yields, despite rising debt levels in eurozone countries. While the current economic mood is improving, fundamental issues like structural deficits and lack of fiscal discipline remain concerning, suggesting a potential future decline in the euro's value.
Gold prices have reached an all-time high, surpassing $3,000 per ounce, achieving a target set by UBS Global Wealth Management. Wayne Gordon, managing director at UBS CIO in Singapore, discusses the potential for further price increases in the market.
Germany's upper house of parliament has approved a significant fiscal spending package, expected to boost GDP growth to 1.5% in 2026 and 2% in 2027, according to Deutsche Bank analysts. However, the near-term outlook remains uncertain due to potential U.S. tariffs and geopolitical tensions, leading to a revised growth forecast of 0.3% for this year. The measures, aimed at increasing defense and infrastructure spending, mark a departure from decades of fiscal conservatism.
Francesco Ceccato, CEO of Barclays Europe, highlights the potential economic impact of US tariffs on Europe, noting that a 25% tariff could push the eurozone into recession. Despite concerns, European equities have outperformed US stocks this year, with a significant shift in fund manager positions favoring Europe. Increased defense spending in Germany may provide a boost, while Ceccato emphasizes the need for deeper capital markets to enhance competitiveness in the EU.
Last year saw a 30% increase in global separation announcements, with over half occurring outside the US, particularly in Europe. Activist investors are intensifying their campaigns, pressuring companies like BP and Honeywell to restructure, while European firms are consolidating amid geopolitical tensions and a need to compete with stronger US rivals. Despite an 8% drop in global M&A volume this year, optimism remains, with expectations of a 10-15% rise driven by corporate activity later in the year.
German 10-year borrowing costs could reach 4%, the highest since 2008, as the country plans a significant increase in spending on defense and infrastructure. A proposed 500-billion-euro fund and changes to borrowing rules are expected to lead to nearly 150 billion euros in additional debt by 2028. Analysts predict yields will rise from the current 2.85% to a range of 2.5% to 3% in the short term, with potential increases driven by higher growth and inflation.
German 10-year borrowing costs are projected to rise to 4%, the highest since 2008, as the country plans a significant increase in defense and infrastructure spending. A proposed 500-billion-euro fund aims to ease borrowing restrictions, potentially leading to nearly 150 billion euros in additional debt by 2028. Analysts expect yields to initially range between 2.5% and 3%, with the European Central Bank possibly adjusting rates in response to increased growth and inflation.
A potential increase in German fiscal spending could drive the 10-year bund yield to 4% by 2028, according to BNP Paribas. This spending, aimed at defense and infrastructure, may prompt the European Central Bank to raise interest rates in the latter half of next year, leading to higher bond yields and a stronger euro, projected to reach $1.20. However, the euro's ascent may face short-term volatility due to ongoing US tariff risks.
ExxonMobil shares have surged past the $113 resistance level, indicating potential for further gains, especially if oil prices rebound. Positive economic signals from China and Europe, alongside insider buying in the energy sector, suggest a favorable long-term outlook. However, geopolitical factors, such as the situation in Ukraine, could impact oil prices.
German 10-year borrowing costs could rise to 4%, the highest since 2008, as the country plans a significant increase in spending on defense and infrastructure. A proposed 500-billion-euro fund and changes to borrowing rules are expected to lead to nearly 150 billion euros in extra debt by 2028. Analysts predict yields will initially range from 2.5% to 3% before climbing, with Goldman Sachs forecasting a rise to 3.75%.
Friedrich Merz
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