< The 2014 All-Europe Fixed-Income Research Team
Although Morgan Stanley’s London-based group slips one rung to third place, the six-strong contingent under the direction of Elga Bartsch is still valued for providing what one money manager dubs “clear and relevant research.” The economists are sounding a note of caution. Official estimates for the fourth quarter of 2013 put real, year-over-year gross domestic product expansion at 1 percent for the European Union and at 0.5 percent in the euro zone. This year, the squad warns, the euro area might lack an engine of growth because intensifying headwinds are buffeting the core’s strong performers, especially France and the Netherlands, while Germany is dealing with domestic policy uncertainties. Prices are another major concern, they advise. “A number of factors have driven inflation to less than 1 percent year over year and are likely to keep underlying inflation around this level for an extended period,” Bartsch says. “With growth and inflation this low, the euro area remains vulnerable to shocks.” As a result, the team expects the European Central Bank to again cut its refinancing rate, which is the interest rate banks pay to borrow from the institution. The ECB lowered its refi rate twice in 2013, by a total of 50 basis points, to 0.25 percent. However, “full-blown quantitative easing, by contrast, would seem a stretch to us as a base case,” she adds. See also Elga Bartsch's profile in the 2014 All-Europe Research Team, 2013 All-Europe Research Team, 2013 All-Europe Fixed-Income Research Team and 2012 All-Europe Fixed-Income Research Team. |