Rabobank’s RaboResearch Global Economics & Markets team underscores renewed pressure in European sovereign yields and rising political-economic tensions with China. The report notes sharp moves in French, Italian and Greek bonds and discusses Europe’s struggle with Chinese hybrid vehicle imports. It links these developments to US strategic aims for a more assertive European industrial policy.
Bond yields and mercantilist overcapacity
“With the turmoil in European bonds ongoing, and riots across France generating unwelcome visual metaphors of people dining calmly as the streets burn, US Secretary of State Marco Rubio yesterday issued a rallying cry to Western civilization.”
“That’s as China yesterday rejected European calls to voluntarily limit exports of hybrid electric vehicles into the European market. It was hoped that China would agree to a soft quota that would reduce China’s share of the European market from 30% to 15%, and that the need for more overt trade restrictions to protect European industry and invite retaliation from the Chinese side might therefore be avoided.”
“Clearly, that is now unlikely to be the case. It’s worth noting that another broad policy ambition noted in the US National Security Strategy was “encouraging Europe to take action to combat mercantilist overcapacity…” Are we about to see that ambition realised through an assertive and self-confident European policy response? It would mark a departure from ten years of criticism of the United States doing exactly the same thing.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
