EUFN

China’s fast-growing $157 billion market for exchange-traded funds will be directly accessible to overseas investors from Friday, at least four years since the plan was first hatched.

Some market observers have suggested that low and negative yields will hinder government bonds' ability to provide a buffer against down markets because bond returns will also be low.Amid the dramatic sell-off in risk assets earlier this year as the global pandemic took hold, and again in September when equity markets pulled back, government bonds served as one of the few true offsets to equity market volatility.Investors' need for income and return is as great as ever, even as global stock dividends plummet.

With central banks anchoring official rates at historic lows, investors are understandably concerned that government bonds won't act as an offset to equity risk the way they have in the past.But recent history suggests that low - and even negative - yields don't eliminate the buffer that's provided by government bonds.In fact, amid the dramatic sell-off in risk assets earlier this year as the global pandemic took hold, and again in September when equity markets pulled back, government bonds served as one of the few true offsets to equity market volatility.

The euro has been showing signs of fatigue in the past few weeks as investors rush for safe havens amid rising uncertainty over US elections.Euro leading indicators are sending mix signals at the moment, but equities and especially banks are still pricing in a "gloomy" outlook.We will need to see further strength in economic indicators in the coming months in order to have a positive momentum in risky assets.Euro bulls should trade the single currency against GBP or CHF, but not against the US dollar in the near term.

Flash Eurozone PMI signals stalling economy as rebound from COVID-19 fades.Services contract, offsetting faster manufacturing expansion.Germany leads upturn thanks to manufacturing surge, France and periphery slip back into decline.Job losses ease but remain higher than at any time since early 2013.

It used to be that central banks heavily influenced inflation through tools such as interest rates, money supply and bank reserves.However, in a post-COVID-19 world with interest rates close to their lower bounds, this balance may be shifting, with fiscal policy now a much more important factor driving inflation.Given this more subdued private sector demand and higher savings, we expect inflationary pressures to remain weak in Europe in the coming year.

Ample economic research has shown that excessive debt, above a certain threshold of GDP, begins to drag down economic growth. US national debt is now well above that threshold. But ballooning debt, in itself, is not the fundamental issue. It is the result of the core problem. In the coming decades, the US economy will be asked to do the impossible: grow faster even while the government extracts more of its resources. There are no easy solutions. There are only painful trade-offs.