Ostrum
  • News & Chronicles
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
  • About Philippe Waechter
Philippe Waechter's blog
  • Insights
  • About us
  • Expertise
  • Our people
  • Media

Philippe Waechter's blog
My french blog
  • News & Chronicles
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
  • About Philippe Waechter
  • News & Chronicles
  • Climate
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
Philippe Waechter's blog
Prévôté
Previous Next
  • 1 min

Political Uncertainty and Interest Rate

  • 20 December 2019
  • Philippe Waechter
  • Interest Rates
  • Political Uncertainty
Total
0
Shares
0
0
0

The increase in economic policy uncertainty is well correlated with the fall in the 10-year interest rate in Germany. An illustration

The graph is an illustration of the link between economic policy uncertainty and behavior’s adjustment via the pace of the German 10-year rate (risk-free asset). The drop in rates since 2018 has its source in the non-cooperative nature of economic policy and the uncertainty that this creates.
This is not a surprise since higher uncertainty increases the search for a risk-free investment. Over a longer period, the two indicators appear consistent but not as precise as what is observed since 2016.

The bet for 2020 will relate to the reduction of
uncertainty about global economic policy

The Brexit issue (again) and the discussions between Chinese and Americans will be essential to grasp this uncertainty.
In a year of presidential elections in the US, it’s probable that China will again be an excellent scapegoat for Donald Trump. The phase 1 agreement on trade with China is a win-win agreement in agriculture. Nevertheless almost 2/3 (64.5%*) of the Chinese products in the US will be taxed and circa 60% (56.7%) of the US products in China will have tariffs. This provides opportunities for tension as the US manufacturing sector quickly falters. China will once again become a scapegoat to convince the Republican electorate. We could then see the return of significant international tensions because the Chinese have no reason to leave the monopoly of tensions to the Americans. We could then see a drop in long rates.

Cf Chad Bown

Related Topics
  • Interest Rates
  • Political Uncertainty
Subscribe to the newsletter

All the news from Philippe Waechter’s blog in your mailbox


Loading
ABOUT PHILIPPE WAECHTER

Le magazine d’experts d’Ostrum

ABOUT OSTRUM AM
  • About us
  • Media room
  • Our publications
  • Cookie Policy (EU)
FOLLOW ME ON
EXTERNAL LINKS
  • Economists
  • Think tank
  • Central banks
  • Blog roll
©Ostrum AM 2023
An affiliate of : Plan de travail 2

Input your search keywords and press Enter.

Manage Cookie Consent
We use cookies to optimize our website and our service.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}