Follow Joshua McCallum
Joshua McCallum is the senior Fixed Income Economist at UBS Global Asset Management, where he provides economic analysis to support and challenge portfolio managers. Before joining UBS in 2005, Joshua worked for the UK Treasury, dealing with an eclectic range of topics including international macroeconomics, the UK budget, economic reform in Europe, and post-conflict fiscal policy in Iraq.
Russia has taken centre stage with a falling currency and the CBR hiking rates to 17%. If the rate hikes are only temporary to calm the currency markets, then the most negative scenario could be avoided. In other markets, our Christmas price index suggests that this year Christmas has become more expensive in Japan and Spain, but cheaper in Greece and the UK.
Greece has returned to the headlines, as market nervousness about the outcome of a snap election for the Presidency has pushed up Greek bond yields. The Presidential election could lead to a general election. If the far-left Syriza party were to win a general election, the party advocates reversing reforms and re-negotiating Greece's bail-out. The Troika will need to develop a detailed plan to prevent contagion in the event of a Greek exit from the euro.
Mario Draghi has given a hint that some form of QE could come after Christmas. The most controversial issue the ECB has to resolve is the composition of the QE – QE based on sovereign bonds would worry some, but corporate debt would bring certain risks. And another big question is how different approaches would lead to different distributions among the countries of the Eurozone.
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