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The German crisis continues

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  • The German (Greek) crisis continues as the Eurogroup meet to discuss bailout details. The solution to this may be some way off. Greek inflation is due tomorrow, expected negative: ironically Greece is one of the few countries that could credibly claim deflation, but also the only Euro country where quantitative policy does not penetrate.
  • Politics aside, last Friday's better GDP data gives upside risk to growth in the Euro area. The US economic performance should help, and lower oil prices are growth inflationary not growth deflationary. Alternative credit channels may also start to operate.
  • Jubilation in Japan, where the GDP numbers finally turned positive. At 2.2% annualised, however, the numbers were not as positive as they were expected to be. The Bank of Japan remains unsure of the merits of further easing or yen weakness.
  • The UK housing market is reported stronger by the Rightmove company, with supply seen constrained while interest in purchasing a property rises. With the Bank of England aggressively tightening policy through mortgage regulation, this is pertinent.