Analysts at Credit Suisse Asset Management gave their opinion about US quantitative easing and the outlook for European economies in 2011.

The specialists believe that American QE will last at least during the first quarter of 2011 and probably during the second quarter. As US economy starts to accelerate towards 3% growth then probably the Fed will start to reverse pond purchases and that, according to Credit Suisse, could be the major risk for markets next year.

As for the euro area, the strategists expect further credit downgrades of the indebted countries which find themselves under pressure. Credit Suisse also notes that the growth differential between Germany and the rest of Northern Europe and the stressed economies is going to remain very wide and deep. It’s quite difficult to see economies like Greece, Spain, Ireland and Portugal generate strong growth next year and that’s going to the one of the major problems in the region, claim in the bank pointing at the fact that Spanish and Italian markets underperform versus the German one this year by almost 30%. Such underperformance is thought to continue in the first half of 2011.

Credit Suisse underlines that there’s now a significant political shift going on in the interests of all governments: the risk of the sovereign debt is transferred of going to be transferred from taxpayers and governments to investors, therefore European bond markets are trading very differently today and this difference will continue at least for the next 2-3 years.



Chart. Daily EUR/USD

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