ECB

In Europe 14th March 2016

Spanish Banks Likely to Avoid the “Swiss rate” scenario

UBS | President Draghi surprised the market positively, both in terms of the magnitude of some of the expected moves (QE extension in the upper end of the range) and also implementing new measures (acquisition of non-financial IG bonds in its asset purchases, and new targeted TLTRO). For (retail) banks like the Spanish, the balance of ECB’s actions has to be considered as positive, especially if trends seen in the swap market are confirmed in Euribor fixings.

In Europe 10th March 2016

QE the main dish

BofA Merrill Lynch Global Research | Ahead of today’s ECB meeting, we think the focus will need to be on QE, which we expect to be extended until September 2017 and accelerated by € 10bn/month. We also expect the ECB to make QE more credible

In Europe 8th March 2016

The ECB Will Prefer To Be Safe Rather Than Sorry

The ECB’s main priority will be to fuel confidence in the financial markets and inflation will be its alibi for this. In February, eurozone CPI receded to -0.2% year-on-year and, in the short term, the region should be prepared for negative rates to continue.

In Europe 2nd March 2016

Euro Area Inflation To Turn Negative In 2H16, Falling To 0.6% In May

Goldman Sachs | While we expect that the combination of the fall in oil prices, the rise in the Euro and the weakening of equity prices will have relatively limited effects on growth, the effects on the near-term inflation outlook are likely to be much more substantial.

In Europe 17th February 2016

Draghi Wants The Cake, And Eat It

Francesco Saraceno | Yesterday Mario Draghi has called once more for other policies to support the ECB titanic (and so far vain) effort to lift the eurozone economy out of its state of semi-permanent stagnation. I just have two very quick (related) comments.

In Europe 22nd January 2016

Will The ECB’s Commitment Be Enough To Stop Punishment From The Markets?

The ECB has committed to reviewing its monetary policy at its March meeting, leaving the door open to implementing any (monetary) instruments it has at its disposal. Thus the central bank is acknowledging the increasing downside risks and the deterioration in inflation, failing to meet end-2015 expectations and discounting low or even negative CPI rates in the European Monetary Union over the coming months. But the question now is whether its commitment will satisfy the markets.

World economy 23rd December 2015

The Dragon’s Tail: What Would A 4% China Do To World’s Markets?

UBS | Our base case forecasts for China’s growth are already below consensus at 6.2% for 2016 and 5.8% for 2017. In this note we study the impact on global economies and assets of a much darker and, in our view, extremely unlikely scenario where China real GDP growth slips to 4%, and nominal growth below 1.5%.

World economy 2nd December 2015

ECB Liquidity Is Not Fungible For Emerging Markets

BARCLAYS | We believe a further expansion in ECB QE will only have regional, and overall limited , effects on EM. Extending the discussion to the effect of BoJ QE, we come to similar conclusions.

The paradox of the ECB long-term refinancing operations

In Europe 2nd December 2015

The Collateral Damage From The ECB’s New Measures

The market has already priced in that the ECB will adopt new monetary stimulus measures at tomorrow’s meeting, which in theory should boost growth and inflation in the eurozone. Analysts agree that more aggressive measures are necessary, but due care must be taken not to damage financial stability.

In Europe 26th November 2015

ECB must “not hold anything back” despite Germany’s pressure

The markets are seemingly focusing on next week ECB’s meeting rather than on geopolitical events. Investors expect they will take new measures on expansionary monetary policy. Yesterday, ECB’s vice president Vitor Constancio, insisted again that the central bank will analyse those if needed to reach the inflation target of 2%.

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