Christine Lagarde IMF director

ECB hikes 25bp at its June meeting, deposit rate now at 3.50%

Peter Goves (MFS) | This was as guided at the last meeting and is largely due to inflation projections being “too high for too long”. On QT, the policy was extended (again, as widely telegraphed) across all APP from July 2023. EGB spreads remain relatively tight and continue to exhibit relatively low volatility. There were minor changes to the forecasts which show medium term inflation at 2.2% (in 2025, +0.1ppt)….

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ECB faces dilemma as inflationary pressures remain at high levels

Jeremy Cunningham, Investment Director, Fixed Income at Capital Group| The European Central Bank (ECB) will face an even more challenging policy environment in 2023. Core inflation appears to have already peaked in the major European economies and should continue to fall as the effects of last year’s sharp increases in energy prices fade. However, underlying inflationary pressures are rising. Higher energy prices are being passed through to a wide range…

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ECB warns of risks associated with liquidity in real estate and debt market

Banca March| The European Central Bank (ECB) continues to see “vulnerability” in the markets given the new interest rate scenario, which in its opinion poses higher financing costs for companies and households that could trigger a liquidity crisis, given the need for massive asset sales in a hypothetical panic scenario. This vulnerability would be concentrated above all in real estate funds and in the debt market, this being one of…

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Eurozone M3 monetary aggregate grows by 1.9% in April, lowest reading since July 2014

According to data from the European Central Bank (ECB), the monetary aggregate M3 in the Eurozone grew by 1.9% year-on-year in April (+2.5% in March) to €16.03 trillion. The reading, which was the lowest since July 2014, was slightly below the 2.0% growth rate expected by FactSet consensus analysts. The ECB also published that bank lending to eurozone households rose by 2.5% year-on-year in April to €6.87 trillion, marking the…

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Philip Lane (ECB) says still “plenty of momentum in food prices”

Link Securities | European Central Bank (ECB) chief economist, Ireland’s Philip Lane, said in a recent speech that there is still plenty of momentum in food prices and core inflation. He also noted that real wages have fallen as inflation has outpaced wages in recent years, but that he believes real wages will recover in the coming years. In this regard, Lane said that he sees wage inflation peaking this…


ECB: the APP reinvestments will stop in July

Annalisa Piazza (MFS IM) | The ECB announced today its decision to hike policy rates by 25bp after hiking by 50bp at its March meeting. Inflation is high and pushing it down to its 2% target in the medium term remains the ECB top priority. However, a slower pace of hiking was not a surprise as current levels of rates are already in restrictive territory and the economic picture for…

Chris Lagarde

ECB continues to contradict market expectations with tightening messages

Renta 4 : Today, on a day in which futures point to an opening with little change, the main macro reference will be the number of available job openings in the JOLTS (Job Openings and Labor Turnover Survey) in the US, which is expected to remain high in February (10.5 million expected as opposed to 10.824 million previously), giving signs of a still very solid labour market. This data will…

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European banks: systemic risk dissipates after Credit Suisse buyout by UBS

Bankinter : The chairman of the ECB’s Supervisory Board, Andrea Enria, highlights the soundness of the sector and considers that the shareholder remuneration policy (average pay-out ~50.0% of NAB) is reasonable. Banking rose +4.79% on Tuesday. Positive highlights: UBS/Switzerland (CHF 19.42; +12.2%); Commerzbank/Germany (CHF 10.02; +7.4%), Sabadell/Spain (CHF 1.07; +7.5%), Unicredit/Italy (CHF 17.42; +6.9%), ING (CHF 11.16; +5.9%) and BBVA/Spain (CHF 6.57; +5.4%). Analyst’s view: Sector fundamentals are good (liquidity,…

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ECB to help banking sector, if needed, but considers it strong

Bankinter : The ECB raises the reference rates +50 b.p.: Deposit: +3.00%, Director +3.50% and Credit Marginal +3.75%. In line with what the ECB anticipated in February. However, it does not comment on future steps. It revises its inflation forecasts downwards, to +5.3% in 2023 (vs +6.3% previously estimated), +2.9% in 2024 (vs +3.4% previously) and +2.1% in 2025 (vs +2.3% previously). In her subsequent appearance, Lagarde says that upcoming…

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Latest ECB Minutes show significant support for +50 b.p. hike to 2.5% (deposit rate)

Yields 4: European markets open higher (Eurostoxx futures +0.5%, S&P futures -0.1%) after a session of less to more on Wall Street, and on a day in which the most relevant will be the ISM services report in the US, which could fall in February (54.5e and 55.2 previously), and where the main focus will be on its price component, with upside risk after the strong rebound seen in the…