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Are the European Commission and the IMF right about Italy?

Persistent structural weaknesses, imbalances, and financial fragilities. These were some of the ways in which the International Monetary Fund (IMF) described the Italian economy in its most recent country report. Almost a decade after the great financial crisis, Italy’s economic prospects remain dim, with the costs borne disproportionately by the working age and younger population. With no gove…

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The M&G YouGov Inflation Expectations Survey – Q3 2013

Despite high unemployment rates, excess capacity and a sanguine inflation outlook from the major central banks, it is important to keep an eye on any potential inflation surprises that may be coming down the line. For instance, we only need to look at ultra easy monetary policy; low interest rates and improving economic growth to see that the risk of an unwelcome inflation shock is higher than …

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Tail about to wag dog again – Italy and Spain downgrades are coming, more carnage to follow

So now we know that the firewall was indeed an illusion.  We had the biggest ever sell off in Portuguese and Irish CDS on Wednesday (and the second biggest sell off in Greece CDS), and now it’s a bloodbath in Italy.  Italian 10 year bond yield spreads have widened 25 bps versus Germany to a Euro era record.  Long dated Italian government bonds fell as much as 2 points earlier today.  Unicredito…

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