EU leaders taking a predictably tough stance - SocGen

Kit Juckes, Research Analyst at Societe Generale, notes that the EU leaders are taking a predictably tough stance on the terms for retaining access to the Single Market.

Key Quotes

“As fights for leadership of both major UK political parties gather steam, the next key development in the UK will come from economic data - and how fast it deteriorates.

One crumb of comfort for anyone running a current account deficit at the moment is the pace of long-term capital outflows from both Japan and Europe. The weekly Japanese securities flow data for the week ending June 24 obviously tell us nothing about the post-referendum world, but the net outflow in bonds and equities reached ¥2.948trn, or nearly US$29bn. It was driven by the biggest sales of foreign holdings of Japanese bonds since March 2008, but foreigners sold stocks and Japanese investors bought both foreign stocks and bonds. One day this will be a yen-negative again, but it's also another source of demand for assets globally - particularly government bonds where those leaving JGBs find even the paltry yields available elsewhere attractive by contrast.”