Mario Draghi was expected to address three points at yesterday’s press conference: i) a possible third 3Y LTRO, ii) hint on the probability of a monetary policy decision, and iii) details on its new concept of “Growth Compact”. The market proved fairly disappointed with what Mario Draghi had to say. On a possible new LTRO, Mario […]
The impact of Friday’s German Ifo business climate index release on financial markets is likely to remain limited as investors’ attention remains focused on the European periphery fiscal accounts. As a result, the Bund safe-haven status is likely to remain attractive while European periphery sovereigns and equities are likely to remain in their current middle […]
Money creation by central banks cannot explain everything but we are in a very peculiar situation where the largest central banks have embarked on quantitative easing. If the scenario of a decent global economic recovery is confirmed, there is a clear possibility of seeing this liquidity feeding most financial markets and particularly risk assets such […]
The leaders of the members states of the European Union discussed employment and economic policies at yesterday’s informal meeting. First, the so-called fiscal compact aimed at strengthening fiscal discipline and introducing more automatic sanctions and stricter surveillance within the euro area was finalised. It has been renamed the “Treaty on Stability, Coordination and Governance”. Under […]
After an 11-hour marathon of negotiations in Brussels, the euro area’s heads of state sealed an agreement in response to the crisis at 5 o’clock in the morning on Friday. While a euro break-up is still not completely unthinkable, an exit to the crisis now appears to be feasible. Decisions were taken on two fronts. […]
The European Central Bank, under the helm of its new President Mario Draghi, lowered interest rates by 25bp yesterday. By acting for the second month in a row, the Governing Council confirmed that the deterioration of the economic conditions are sufficiently serious to justify bringing back the refinancing rate to 1%. The refi rate has […]
The eurozone debt crisis is intensifying. It has been expanding to an ever higher number of countries: recently France has witnessed a first salvo of attacks from the markets. It is worsening in distressed countries. Wanting to solve the indebtedness problem through virtuous management of public finances, without massive intervention by the ECB, implies reducing […]
Despite the current very uncertain environment, the ECB’s Governing Council decided yesterday afternoon to raise its interest rates by 25bp. As a result the corridor between the marginal lending facility and the deposit facility remained unchanged at 150bp. The pre-crisis corridor was 200bp. Yesterday’s decision was taken unanimously and was probably dictated to a large […]
As expected the ECB’s Governing Council decided yesterday to leave its official interest rate unchanged at 1.25%, but Jean-Claude Trichet used the code words “strong vigilance” several times suggesting that the main policy rate will probably be raised by 25bp to 1.5% at July’s meeting. The hint was reinforced by other hawkish sentences like: “we […]
To summarise an extensive research note published today, the whole euro area is in a very difficult situation. One year after the €110bn 3-year international aid package had been approved to help the Greek government, doubts about the country’s ability to honour its debt have resurfaced again. With the exception of some short periods of […]
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