Economic Instability Hits Europe Hard

Economic Instability Hits Europe

European countries are known on being economically stable. Countries in this region is considered well-off compared to other countries in other regions.

Even with this reputation this region had not been safe from economic hit by the pandemic. For the past few weeks Europe’s economy had been unsteady. Experiencing rapid decline in rates and damages to its industries. This economic damages are also reflected on its markets.

Economist feared that if stock markets continues to declines. Europe’s economy will find it hard to recover or it will take a long period of time. This scenario is what economist and investors wish not to happen. Economic stability of Europe is nearing to an all-time down. These leaves investors and business people to worry about the future state of Europe’s economy.

Europe’s economy expects further drop

After a record breaking drop in rate last March, economist tells investors to brace themselves for more movements. Economist revealed that they’re expecting a further drop in business activities and transaction throughout Europe this April. This is expected as the manager’s index in the Eurozone drop to 29.7 all-time low recorded last month. Meanwhile, UK’s equivalent fall down to 36.

Further forecast had shown Eurozone has 26 mark and 32 for UK. These data had shown a rapid and further drop in transactions. RBC Capital Market’s Cathal Kennedy states that by the time period of the survey were conducted, there is a possibility for both (Eurozone and UK) to decline further this month.

Nomura economist George Buckley said that this scenario is similar to China’s figures. As to him last month’s figures signals stabilization of activity at very low levels rather than a recovery. Tommy Subbington had also revealed that April figures could be just as bad as March. He also added that even the figures reach 50 mark it’s not a sign that there is a recovery.

These statements fuels the speculations and worry of investors. These tend them to think that surely Europe’s economy is unstable as of now and could experience worst in the following days.

What higher treasury supply implies

US Treasury will auction off more than $150 billion worth of short dated securities. This will mature in one year or less. Reports this recent week s had revealed that markets had flooded with Treasury bills. Meanwhile this Treasury bills started to finance $2 trillion relief package.

Market analyst said that so far market had digested this excess of new supply with less trouble. Some anticipates that there will be a significant rise in the rates in the long run. The Federal Reserved had agreed to purchase unlimited quantity of Treasuries to ensure smooth functioning.

This move is to ensure the smooth functioning of the largest debt market in the world. US central bank is expected to gobble up most of the new supply.

As to Colby Smith, the interest rates will remain low, reflecting what a slow growth environment will be. He also added that the Treasury will have no issue funding.

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