MADRID | By J.P. Marín Arrese | Draghi’s performance in Jackson Hole has largely overshadowed other central bankers. Undoubtedly he surpasses himself in summertime. Just remember his landmark defence of the Euro back in August, 2012.
MADRID | The Corner | Although it is not part of ECB’s mandate, last Friday in Jackson Hole, President Mario Draghi spoke about what needs to be done in the euro area to address the problem of high unemployment and weak economic growth. As Barclays analysts believe, the speech “represented a significant breakthrough in the ECB rhetoric and will probably have significant implications regarding the debate just about to start between European government on policies that need to be deployed to avoid a ‘triple-dip recession’ and a fall in outright deflation.”
Madrid | The Corner | Despite last bad figures of the Eurozone economy, European stock markets are rising on expectations of ECB further action. However, it seems that ECB will wait to see if the actions taken until now and the TLTROs of September and December will take effect. Meanwhile, both Barclays and UBS analysts trust in these measures to support European recovery.
Berlin | By Alberto Lozano | Mario Draghi is speaking today again. Although no decisions or changes in the ECB’s monetary policy are expected, markets expect to know the ECB president’s assessment of the latest economic and financial developments.
MADRID | By J.P. Marín Arrese | Mario Draghi unveiled the requirements to be met for drawing cheap money from the targeted long-term facility on Thursday. Those look extremely loose and scarcely demanding. Banks may cash up to 7% of their net lending to businesses and households in the auctions scheduled later on this year. A move that could lead to a massive €400 billion funding injection, should bidders make full use of their potential rights. Borrowing four-year tranches at interest rates so low as 0.25%, seems indeed an unbeatable incentive.
ZURICH | By The Corner | As expected, the ECB did not unveil any new policy measures on Thursday. Although the Bank maintains an easing bias, it signalled that it wants to wait and see how the monetary stimulus delivered last month unfolds. UBS’ base case scenario remains that ECB rates will stay on hold for the foreseeable future and that QE will not be deployed. The key news from ECB’s meeting was more of a technical nature.
MADRID | By Francisco López | The ECB President announced with fanfare last month a battery of measures to revive the credit in the EZ. The problem is that the open bar announced by Draghi won’t have an impact on loans until 2015 and, meanwhile, credit fall continues to accelerate in some peripheral countries, especially in Spain and Italy. There are those who believe that the latest data could force Mr Draghi to approve a direct debt purchase program before year’s end.
MADRID | By J.P. Marín Arrese | Euphoria is back in the markets following the ECB substantive package. The prospect that money will flood the financial system has significantly reduced the rate differentials between the Eurozone peripheral and core countries. Squeezing the channel for overnight interbank lending has brought the Eonia to fresh lows. [Graph: Eonia’s evolution in the past year]
MADRID | By Luis Arroyo | The ECB spoke up on Thursday during one of its most expected conclaves. For months, the European institution had been announcing expansive measures if things didn’t change, and it finally made a move. How should we interpret it? Let’s see first why the central bank had to do something “special.”
MADRID | By Ana Fuentes | Now that the ECB will charge banks for keeping them their money, don’t be surprised if some short-dated core sovereign bonds start yielding negative, Bond Vigilantes remark. Actually we’ve seen that before in the EZ: in August 2012, German authorities received with open arms 750 billion euros in deposits of its eurozone neighbors, mainly Spaniards and Italians. That intense demand drove the prices of short dated bunds to levels which produced negative yields.