Nomura’s Jens Nordvig sees France threat to eurozone

Jens Nordvig, managing director, head of Fixed Income Research, Americas and global head of G10 FX Strategy at Nomura, has warned that the chief risk to the eurozone may have shifted to the French sovereign bond market.

In an interview with Norwegian daily Dagens Næringsliv, Nordvig said that such a collapse would leave the ECB as the final backstop to the eurozone project. That is unlikely to happen through 2014, but looking ahead two to three years it is one of the horror scenarios to be considered, he said.

Meanwhile, Nordvid called for a German-led “Marshall Plan” to help the more crisis-stricken parts of Europe. This would help meet German concerns for more rapid economic recovery across the region, while framing any such assistance as an ad hoc measure would assuage German and other politicians who are never going to agree permanent measures for wealth transfers, he said.

Nordvig also called for the ECB to be far more aggressive in its approach to Europe’s deflation threat. To avoid the Japanese scenario, the ECB should seek to depreciate the value of the euro, increase inflation and encourage consumption.

 

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