The Chart of the Week shows the DAX, the main German stock market index, and the 2-yr/10-yr German Bund spread. The ECB meeting of two weeks ago resulted in a rate cut of 25bp bringing the refi rate to 0.50%. Moreover ECB president Draghi stated that the ECB has an "open mind" regarding negative deposit rates, suggesting that policy rates could fall further. Nonetheless, whereas risk taking was clearly bolstered by the ECB, market rates and yields did not sink further. Instead, the ECB meeting...

The Chart of the Week shows government spending as a % of GDP in Eurozone countries plus Latvia that will most likely enter the Eurozone by January 2014 and of Lithuania that will likely adopt the euro by January 2015. This chart is based on the figures published by the European Commission in its semi-annual forecast last week. The chart reveals many interesting things about the Eurozone economies. First it shows that socialism and government bureaucratism is relatively extreme in France and...

The Chart of the Week shows the unemployment rates in the US and the Eurozone. This week, unemployment figures in the US (for April) and Eurozone (for March) will be published. After a recovery in GDP lasting already 15 quarters and growth averaging a modest 2.1% the unemployment rate in the US has declined from 10.0% in October 2009 to 7.6% in March. This recovery was mainly due to declining labour participation, which helped lowering the official unemployment rate even while employment growth...

The Chart of the Week shows the annual growth rates in Eurozone exports outside the Eurozone and industrial production. Although the Eurozone economy has been in recession over the last year or so, this has not been the case for the global economy. What is interesting in this respect is that net exports of the Eurozone are not reflecting ongoing growth elsewhere in the world: the annual growth rate has dropped close to zero, signaling flattening exports to the rest of the world. This is also...

The Chart of the Week shows the S&P500, which is the main US stock market index, and the size of the Federal Reserve's balance since 1990. The US stock market has been boosted since the Federal Reserve announced QE3 and QE4 late last year, which is consisting of asset purchases worth USD 85 bn per month with newly printed money. Changes in monetary policy remain a key to the outlook for financial markets. The minutes of the FOMC meeting of last month, which were released last week indicated...

The Chart of the Week shows the unemployment rate and the labour participation rate in the United States. Last Friday's release of the US labour market report for March turned into a disappointment. Non-farm payrolls growth was relatively weak at 88k in March, much below the average of about 200k per month seen recently. Nonetheless, the unemployment rate fell from 7.7% in February to 7.6% in March. Normally this is reason for optimism. However, this time it was painfully clear that the fall in...

The Chart of the Week shows Japan's government expenditures, revenues and government bond issue amounts. Last week's trade deficit (for the eight month in a row) data should be a reason for concern, especially as more than half of Japan's government expenditures have to be borrowed at present. True, this was no problem so far as the government has been able to finance its deficits domestically, but there are signals that the country moves from being a net creditor to a net debtor nation....

The Chart of the Week shows UK public sector net borrowing excluding financial interventions. The UK's fiscal deficit ratio (% of GDP) is still at levels comparable to those of the weaker eurozone countries such as Spain and Portugal and progress to lower the deficit has been slow, while the country also runs a current account deficit. Moreover, money 'printing' by the central bank that helps to finance the government's budget deficits, fast rising public sector debt levels and persistent...

The Chart of the Week shows nominal and real disposable income per capita in the United States. The chart depicts that US households have not benefited much from easy monetary policy given that their real disposable income is basically at the same levels as in 2006 as inflation eroded part of their income. No wonder that consumer spending has expanded only at a relatively modest pace! In fact, spending growth was probably stronger than you would expect based on real disposable income growth....

The Chart of the Week shows bank lending to the private sector as a whole and to households and non-financial corporations. The ECB's monetary data signaled a further normalisation of deposit flows as most periphery countries witnessed an inflow of money to banks in January. Combined with the repayment of the 3-year LTRO loans, this is an encouraging development. Nevertheless, the ECB is probably disappointed by developments in the lending market, but with banks repaying longer-term ECB loans,...