In today’s briefing:
- US Dollar is Dead Redux
- Demographics Watch – a Public Debt Timebomb
- Eurozone Deposits Stable, but a Lot Is Happening Underneath
- EA: Surveys Shrug-Off Shock in Mar-23
Demographics Watch – a Public Debt Timebomb
- Ageing populations tend to act as a drain on public resources through the healthcare, social security and pension channels.
- Though the make-up of the most heavily-indebted countries remains similar (Japan, Greece and Singapore continue to make the top 3), the gap between those countries has shrunk dramatically.
- Left untethered, the ageing problem and its second-order economic impacts really are a ticking time bomb.
Eurozone Deposits Stable, but a Lot Is Happening Underneath
- Total Eurozone bank deposits have hardly declined, while US bank deposits have been coming down for just over a year.
- Yet, depositors are switching from Overnight deposits, callable immediately and earning the lowest interest rate, to longer-maturity deposits with some yield pickup.
- The decline in Overnight deposits has contributed to a decrease in M1 Money Supply Growth of 2.7%. This significantly impacts the inflation outlook.
EA: Surveys Shrug-Off Shock in Mar-23
- Despite financial stability issues, resilience appears to have continued in the Euro area through March. Sentiment has stayed robust, with employment expectations elevated.
- Consumers are the only group gloomier than their average. The positive sentiment is relatively narrow among EA members, unlike employment’s broad-based strength.
- Tight labour markets are more directly relevant to inflationary pressures, which are far too high. Firms still expect widespread price increases across sectors.
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