ECB QE could theoretically surpass €2 trillion according to reported program details - page 13
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Don't believe the ECB, there are QE supply constraints ECB says bond supply no problem
The ECB is scheduled to buy €700 billion of government bonds by the end of Sept 2016. Next week, most economists expect them to ratchet the total above €1 trillion.
It might be harder than it seems.
Reuters reports that €1.7 trillion Eurozone government bonds are now trading with a negative yield, that's almost 30% of the total outstanding.
If it wasn't a problem then the ECB wouldn't be mulling buying municipal bonds or risking non-payment on buying bank loans.
Besides, what's the point of QE? If it's to drive down yields in order to encourage lending then the job is essentially done. German 10-year yields are at 0.46%. At some point lowering yields, even into negative territory, isn't going to lower the cost of corporate borrowing, it just saps money from financial companies and pensions who are forced to buy bonds anyway. Governments may have a bit more to spend but austerity is still in full force.
It's plain FX manipulation at this point.
EUR/USD: The Wild Card - Nomura "The ECB has clearly put further rate cuts on the table, below the current level of -20bp for the deposit rate. But what is the lower bound for the ECB? Can the template from Switzerland or Denmark (both at -75bp) be applied? There are a number of differences, which suggest that the ECB needs to be more cautious.
Interestingly, forward interest rates are pricing substantial further cuts, both from the ECB and the SNB. In a way forward rates markets are testing the lower bound already, and makes it difficult for the ECB to over-deliver.
Our year-end target for EURUSD of 1.05 has almost been achieved. Given current market pricing, we are not convinced that the ECB meeting itself will see notable follow through.
The wild-card is that a break of 1.05 (before or after the ECB) could see a technical move down to 1.02-1.03."
ECB said to present largely unchanged macroeconomic forecasts - BBG Bloomberg report This diminishes that probability of a large move from the ECB. The euro is rallying on this, it's bullish.
Has the tide now turned for the euro? Have we moved from rally selling to dip buying in the euro? It only takes a moment to turn a market right around and that moment may have been Draghi today
I don't for one minute suggest we'll be seeing 1.20 anytime soon but the expectation of a more dovish ECB is/has washed out
The big event now is the Fed and while that's a dollar positive, the effects may not be as great now
I've said for a while that I fancy short dollar after the FOMC and you can now through the euro into that pot
The euro's sitting nicely above 1.0800 now and that looks to be where we're making camp. A poor NFP tomorrow could be fun and games, while a good number might tempt the euro dippers out the woodwork
Euro slipping in early European trading as USD demand returns European desks are underway and we're seeing the euro in retreat as traders pick up a few US$ EURUSD is on session lows of 1.0889 dragging EURGBP down to 0.7209 after failing above 0.7235. EURJPY is on session lows at 133.60 which is tempering USDJPY gains but the pair is underpinned at 122.68
EURUSD should find some support between 1.0880-85
Cable testing 1.5100 after failing above 1.5150 in Asia but finding some support on the EURGBP selling
Exclusive: ECB lowered stimulus ambitions after hitting opposition - sources Hints by Mario Draghi ahead of last Thursday's ECB rate meeting that the euro zone may need another big injection of money backfired, stiffening the resolve of more conservative central bankers who criticized him for raising expectations too high, sources familiar with the discussions said.
The European Central Bank President and his chief economist Peter Praet stoked expectations with dovish speeches in the weeks before the meeting but the ECB's Governing Council concluded that markets needed to be disappointed this time because the economic outlook has improved and new inflation forecasts were not as bad as feared, the sources said.
A pending U.S. Federal Reserve rate hike also factored into the decision, though to a lesser extent, as policymakers were concerned that a big move by the ECB would weaken the euro further and possibly force the Fed to delay its own action on rates to prevent a too rapid divergence of policy between the world's top two central banks.
The ECB cut its deposit rate on Thursday and extended its monthly asset buys by six months to boost stubbornly low inflation and lift growth. But the moves were considered by markets to be the bare minimum in the light of the bank's previous signals.
One source with direct knowledge of the situation interpreted Draghi's public stance ahead of the meeting as trying to pressure the Governing Council to take bigger action.
"Draghi raised expectations too high, on purpose, and attempted to paint the Governing Council into a corner," the source said. "This was problematic and he was criticized for this by several governors in private."
Unlike last year, when opponents of quantitative easing made their stance public before the decision, the hawks mostly worked behind the scenes.
read more
ECB's Mersch says they haven't run out of ammunition ECB exec board member and former Luxembourg cb gov talking to International Bankers Forum
Nothing in the comments that we don't already know.
Bloomberg reporting the headlines and say the full interview will be published tomorrow 29th
EURUSD 1.0970 just off 1.0978 highs having rallied from 1.0955 this morning
Bank Lending to Businesses, Households Grows in Nov: ECB The European Central Bank (ECB) provided some cheer as the year end approaches, announcing the latest monetary developments in the euro zone for November.
The ECB said in a press release that the annual growth rate of bank loans to businesses across the euro area rose to 0.9% in November from 0.6% booked in the previous month, reaching €9 billion in the reported month, but still remaining below the €20 billion reported in October. Furthermore, the ECB said that bank loans to households rebounded 1.4% year-on-year in November, climbing from 1.2% seen in October.
"The recent improvement in bank lending to businesses will provide reassurance to the ECB that its Quantitative Easing and other stimulative measures are having a positive impact in improving banks’ willingness to lend to the private sector... It is notable that business confidence was at a decent level across the euro zone in November," Howard Archer, chief European and the UK Economist from IHS Economics, wrote in a note on Wednesday.
However, the ECB also reported that the euro zone's money supply growth dropped to 5.1% in November after a rise in October, highlighting that this level is still above the target of 4.5%.
According to many predictions, the improved results announced shortly before the new year could mean that the ECB will keep its the hands off the red button for additional measures, and remain in "wait and see" mode in the first months of 2016.
read more
Total purchases €8.68bn vs €4.5bn prior in latest ECB QE count Latest QE purchase numbers from the European central bank
Looks like the ABS market is slow to pick up from the new year. This week will be more telling for the weekly numbers
ECB Minutes: Downside risk seen from external factors
Minutes from last ECB meeting now published
Essentially the Minutes are a rehash of the statement/comments from Draghi in the presser at last meeting.
EURUSD is trading a little lower again with the Minutes not necessarily backing up the earlier more bullish comments reported by Reuters in their discussions with certain gov council members.
ECB clearly erring on the side of caution in both growth and inflation forecasts.
source