Based on preliminary figures from Eurostat, Eurozone inflation was again recorded at -0.3% for the fourth consecutive month in December. Core inflation, which excludes highly volatile energy prices, did remain positive at 0.2%, the same as in November of last year. Over that period, Greece saw the sharpest decline at -2.4% and Poland the sharpest increase at 3.4%. Inflation in the Netherlands in December 2020 is estimated at 0.9%, well above the Eurozone average.
China’s Belt and Road Initiative appears to be under pressure. The project is intended to further boost global trade with China and it should secure the supply of raw materials to China. This is achieved by providing, mostly developing countries, with favorable loans for the construction of major infrastructure projects. However, recent research by Boston University showed that investments by Chinese state-owned banks between 2016 and 2019 already dropped from USD 75 billion to USD 4.9 billion. In addition, analysts at Rhodium Group estimate that in 2020 the principal payments of about a quarter of all outstanding Chinese loans will be delayed. It is expected that this will continue to increase due to the ongoing corona pandemic.
In 2026, the Netherlands will transition into a new pension system. The board members of two of the Netherlands’ largest pension funds, ABP and PMT, are warning that different rules must be put in place quickly for the transition period. In an interview in Algemeen Dagblad, Corien Wortmann (ABP) and Terry Troost (PMT) accuse Minister Koolmees of Social Affairs of being too optimistic about the impact of the transition on pensions. The board members also call on the minister to amend the rules on the actuarial interest rate and the coverage ratio quickly, otherwise they fear that many pensions will have to be cut.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap is unchanged at -0.22% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
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