ECB

In Europe 9th June 2014

What is necessary to reactivate credit?

MADRID | By Ofelia Marín-Lozano | Now that stock markets are at maximum levels (absolute maximum for S&P 500 and relative one for Eurostoxx 50), stress tests are decisive to reactivate credit. They are already in the first phase (which consists in evaluating the assets’ quality or AQR) and the overall outcomes will presumably be published in November. It seems likely that credit will recover sooner, inasmuch as banks know their individual results and the ECB may advance some messages.

In Europe 6th June 2014

Draghi, still behind the curve

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.”

Markets 6th June 2014

After ECB’s bazooka, will we see negative bund yields again?

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.

In Europe 6th June 2014

Draghi asserts his authority

MADRID | By JP Marin Arrese | A couple of years ago, Draghi rescued the Euro from its plight. Yesterday, he saved Europe from a protracted economic performance. By delivering more than expected by markets, he changed the rules of the game in monetary policy. His bold rate cut bringing funds hoarded by banking institutions into negative territory seems close to unconventional manoeuvring. His targeted 4-year massive 400 billion liquidity injection will prop up credit to enterprises and individuals, providing a robust boost to growth.

Markets 5th June 2014

ECB takes the reins in a historic move- but where’s the QE?

MADRID | By Julia Pastor | In a historic move, the ECB cut the benchmark rate to 0.15 percent from 0.25 percent, and reduced the deposit rate to minus 0.10 percent from zero, becoming the world’s first major central bank to use a negative rate and pushing entities to increase credit lending. Spanish Ibex35 reacted to the news with a 0,8% increase.

In Europe 5th June 2014

All eyes on the ECB

LONDON | Barclays analysts invite you to answer the following question: What action do you expect the ECB to take at its Thursday 5 June meeting? The survey closes at 10am London time on Thursday, 5 June 2014, and the results will be published at noon that day in the NY open edition of this publication.

In Europe 5th June 2014

Draghi will have to do more than lowering interest rates

MADRID | By The Corner | Head of economic analysis at Link Securities Juan José F. Figares explains that if the ECB only reduces interest rates (i.e. intervention and deposit rates), stock markets will plummet since investors’ expectations will not be fulfilled. Should the central bank activate a new conditioned LTRO and open the door to a new asset purchase program, he adds that markets will react neutrally first and then, they will become positive. Note that the Eurozone’s GPD grew only by 0.2% in the 1Q14, according to the Eurostat.

Markets 4th June 2014

Falling EZ inflation makes it tricky for Draghi

MADRID | By Francisco López | Markets are taking for granted that ECB’s chairman Mario Draghi is going to act tomorrow. What is not that clear is to which extent he will do it. The last inflation figures on the euro area -a greater fall than the expected in May, standing at 0.5% and thus worsening deflation risks- represent a convenient opportunity for those ECB’s members claiming immediate bold measures.

In Europe 3rd June 2014

Looking forward the ECB’s relief

MADRID | By Luis Arroyo | The ECB’s Thursday upcoming meeting will be historical for the EU economy. Any move will mean some easing, even if it will be very difficult that it reactivates the euro zone. What it should definitely do is to massively buy public debt, removing it from financial assets for the banks to find fresh liquid assets as well as capital gains to cover its holes and thus cut interests of private sector’s credit.

Markets 2nd June 2014

A busy week ahead with eyes set on ECB

MADRID | By Jaime Santisteban | Stock markets ended May trading high: +3.1% in Spanish Ibex 35 and +2.1% in EuroStoxx. We start a busy week for markets with all eyes set on Thursday’s ECB rate announcement. “The central bank is a slave of its own words and cannot afford to disappoint,” some analysts are pointing out.

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