@fwred

Head of Strategy & Macro Research, Pictet Wealth Management @PictetGroup. ECB Watcher. All opinions mine.

 Switzerland
Joined April 2009
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Central banks: from whatever it takes to whatever it breaks.
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C’est pas gagné 🙈
Antoine Levy@LevyAntoineOct 20
L'excellente mission @XJaravel et al (07/26) évaluait l'ajustement budgétaire stabilisant la dette à ~126 milliards/an d'ici 2032. Leurs hypothèses: déficit 2026 à 5%, taux d'intérêt à 3,3%. Le déficit est de 5,4% et les taux sont à 5%. Ca porte l'ajustement à ~200 milliards.
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🇫🇷 The 10-year French OAT bond yield hit 5%, highest since 2002. A symbolic threshold, yet unless global rates come down because of oil or AI, in France it's more likely to get worse before it gets better.
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The 10-year OAT-Bund spread is edging closer to 160bp. Crucially for the ECB though, some degree of contagion has resumed to Italy with 2Y spreads rising again - this is one of the key metrics to watch.
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Frederik Ducrozet retweeted
Joe Weisenthal
@TheStalwartOct 15
In the newsletter, I wrote about what a clarifying week this has been for markets. We got two hot inflation prints, and yet rates across the board have been falling. It's never been more obvious that the entire market is just the AI trade, and virtually nothing else.
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Anna Wong
@AnnaEconomistOct 14
This is the diffusion of CPI inflation, measured similarly to Kevin Warsh's preferred PCE inflation diffusion metric. It's down. our full reaction @TheTerminal blinks.bloomberg.com/news/st…
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Maxime Sbaihi@MxSbaOct 13
C'est HISTORIQUE: Bercy publie pour la 1ère fois le poids réel des pensions dans le budget de chaque ministère. Attention, ça pique: 32% du budget de l’Éducation nationale et 30% du budget de l'Intérieur part en réalité dans... les retraites Tous les ministères sont concernés⤵️
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Greg Ip
@greg_ipOct 10
Scott Bessent, at his confirmation hearing in Jan/2025 to be Treasury Secretary: "the tragedy going on in Ukraine is one of the greatest tragedies of my adult life ... I believe that the sanctions [on Russia] were not fulsome enough. I believe that the previous administration was worried about raising US energy prices during an election season... if I'm confirmed and if President Trump requests ...I will be 100% on board for taking sanctions up." Mark Warner (D-VA): "I very much appreciate your willingness and I hope you will be an advocate for keeping those sanctions on and actually advancing them even further." rev.com/transcripts/scott-be…

Scott Bessent Confirmation Hearing Transcript | Rev

Scott Bessent testifies at Senate confirmation hearing for Treasury Secretary. Read the transcript here.

rev.com
Treasury Department
@USTreasuryOct 9
Today, at President Trump’s direction, the Office of Foreign Assets Control (OFAC) is immediately issuing a temporary general license to allow the supply of Russian diesel to the global market.
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Frederik Ducrozet retweeted
Joe Weisenthal
@TheStalwartOct 8
Expired: AI will take your job. Tired: A human working with AI will take your job. Wired: A human working with an unreleased model at an AI company will take your job.
Joe Weisenthal
@TheStalwartOct 8
THE REAL IMPLICATION OF THE AI MATH BREAKTHROUGHS I wrote about an element of AI that needs to get more discussion. The best public models will always be far behind what the labs can work with internally. Think about what this means for intelligence-intensive industries.
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The very first step of verbal intervention - repeating that all instruments are available.
*Walter Bloomberg
@DeItaoneOct 8
*LAGARDE: ECB HAS TOOLS TO COUNTER UNWARRANTED MARKET DYNAMICS
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🇺🇸 US AI imports have *doubled* in just one year, from roughly $500bn to over $1,000bn annualised. In August, AI related goods imports represented 27% of total imports (up from 10% in the last decade), or 3.3% of GDP (up from 1.3%).
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Stirrings of a sovereign -bank loop? France's banks are very large, 3 times French GDP. In August, insuring their debt via CDS cost the same as German banks. Why, if the banks hold few (4% of assets) bonds? The link is the state guarantee: we still don't have European deposit insurance!
Christophe Barraud 🇫🇷 🇲🇨
@C_BarraudOct 6
🇫🇷 🇪🇺 French Banks’ Credit Risk Has Surged Above Major European Peers - Bloomberg bloomberg.com/news/articles/…
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🇫🇷 French budget execution remained broadly stable through August (€159.6bn deficit vs €157.5bn in 2025). Fiscal revenues rose €6.4bn but spending rose €13bn (interest burden, defense, energy). This year's revised deficit target may be achieved, but the hard part lies ahead.
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budget.gouv.fr/documentation…
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We’ve not reached the stage yet where Le Spread make all the headlines of the French media though. Nothing like Lo Spread in Italy back in the days. And no, the ECB is not going to step in at these levels. Closer to the beginning than the beginning of any kind of resolution.
JohannesBorgen@jeuasommenulleOct 2
We've reached the stage where the answer to "Why is Le Spread up?" is "Because today is after yesterday"
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🇪🇺 No good news on the European inflation front, and the longer it lasts, the worse it gets. But at least core inflation was in line with ECB staff projections.
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🇺🇸 As a result of the soft PCE and the revisions, the Inflation Shock Momentum Index based on the San Francisco Fed model improved significantly through August.
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🇫🇷 Le Spread enters a new regime as the rates sell-off hits the weakest links. OATs facing a perfect storm of political radicalization, shifting opinion polls, weak growth, large deficits and borrowing needs (which the Treasury estimates will rise by €28bn in 2027, to €340bn).
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The AFT estimates that borrowing needs will rise to a record €340bn in 2027 (up €28bn from 2026), against the backdrop of a 5% deficit, rising interest burden (€73bn, up €10bn) and larger redemptions (€190bn, up €19bn). aft.gouv.fr/fr/publications/…
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Betting against the House? Shocking.
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🇪🇺 Euro area PMIs defying oil and political gravity, partly driven by rising AI and defence spending. Yes, inflationary pressures are rising again, but PMI gauges look contained and risks of second-round effects remain limited.
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