The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2017, popularly known as the Nobel Prize for economics, has been awarded to Richard H. Thaler for his contributions to behavioural economics. Thaler is the second behavioural economist & scientist to win the Nobel prize after Daniel Kahneman won it in 2002 for having integrated insights from psychological research into economic science.
Green bonds have been the best performers in the Eurozone year to date. Is it a warning knell or cause for celebration? The IMF austerity is still in place, but there are hopes they will relent. Portuguese bonds have also rallied since March whilst Spanish Bonos declined. German Bund yields are up to 28 bps since January heralding an end to ECB QE.
Richard Thaler, the father of ‘nudge theory’, has made economics more human. The recent economics Nobel prize winner has shown that financial and economic decision makers are not always rational, but mostly deeply human. The concept of 'nudge theory' is a relatively subtle policy shift that encourages people to make decisions that are in their broad self-interest. It’s not about penalising people financially if they don’t act in certain way. It’s about making it easier for them to make a certain decision.
The Reserve Bank of India’s recent monetary policy decision to keep benchmark rates unchanged in the face of rising inflationary pressures is justified, but is also jarring as India braces for recessionary conditions up ahead.
Prime minister Shinzō Abe called a snap general election in October, amid rising geopolitical tensions. The Bank of Japan maintains quantitative and qualitative monetary easing (QQE) despite the Federal Reserve's plan to reduce its balance sheet. Japanese stocks will benefit if the ‘Three Arrows’ of Abenomics continue. In addition, wages are rising whilst inflation is stuck at zero.
Amid the disappointing performance of the index of core industries (ICI) in July 2017, at 2.4% year on year growth, the steel industry stands out with an outlier growth of 9.2%. In fact, steel has shown a robust growth of 10.9% on average in the past 12 months, which is far higher than average ICI growth of 3.6%.
China has long been the marginal driver of demand for a wide array of commodities. In an attempt to understand the recent rise in the price of industrial metals, the strength of Chinese demand is a key factor. The picture is mixed.