“I can understand it when markets significantly underestimate the value of the bonds… but I can’t understand it now. Frankly, there is a loop between central banks and markets and, when one of them moves, it will feed the decisions of the other –this is madness. I hope I’m wrong,” Vigil says.
Not everything is bad news, though. Barclays’ analysts point to the positive effect that the drop in oil prices will have on the economy. It will be more pronounced and have a mor epositive effect on the US than on Europe, where high oil prices are due to the 80% tax on the final price. However, for Europe, the Euro falling below the Dollar would have an even more positive effect: while a 10% fall in oil price has a negligible impact on GDP, a 10% fall in the Euro leads to a 0.5% growth in one year.
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